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Journal Article

Federal Personal Income Tax Policy in the 1920s

Gene Smiley and Richard H. Keehn
The Journal of Economic History
Vol. 55, No. 2 (Jun., 1995), pp. 285-303
Stable URL: http://www.jstor.org/stable/2123554
Page Count: 19
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Federal Personal Income Tax Policy in the 1920s
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Abstract

During the 1920s, federal personal income tax rates, which had been dramatically increased during World War I, were sharply reduced. These tax rate cuts have often been cited as an example of a successful supply-side policy, but they have also been criticized as policies designed primarily to benefit the wealthy. We argue that a primary motive for the tax cuts of the 1920s was the desire to reduce the tax avoidance by wealthier individuals that occurred as a result of the previous tax rate increases and that the tax cuts enacted did reduce tax avoidance.

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