2 HASKINS & SELLS January
Concerning the Revenue Act of 1924
TAXPAYERS throughout the country
recently were startled when the publicity
features of the Revenue Act of 1924
were brought to their attention by the
public press. For many months prior to
the passage of the Act it was known that
Congress would eventually demand a
certain degree of publicity in the tax
affairs of the country, and the extent
thereof was clearly and definitely indicated
on June 2, 1924, when the President
affixed his signature to the completed law.
Yet the startled surprise and indignation
were apparently as great as might have
been expected had no previous knowledge
existed that such announcement must of
necessity be made to comply with the
requirements of the new Act. Is it not
possible that other changes in the new
law equally important to the taxpayer
have failed to receive the attention they
The intent of the Revenue Act of 1924
is to give relief to the individual taxpayer.
Such benefit as results to the corporate
taxpayer is incidental to the tax reduction
to the individual. In the following brief
summary of the changes effectuated it will
be noted that in nearly every instance it
is the individual who receives the relief.
The immediate benefit of the new law
was the reduction of the 1923 taxes of
individuals to the extent of 25 per cent.
Such reduction cannot be applied to the
taxes for 1924, for which year a reduction
in normal and surtax rates gives a substantially
equivalent relief. Beginning
with the 1924 return, the normal tax on the
first 34,000 of net income in excess of the
exemptions is reduced from 4 to 2 per cent.
The tax on the next 34,000 is 4 per cent.
instead of 8 per cent., and on income in
excess of $8,000 the rate is reduced from
8 per cent. as fixed by the 1921 Act, to
6 per cent. The very material mitigation
in the tax burden of the great mass of
small taxpayers is vividly revealed when
it is considered that 6,400,000, or over 96
per cent., of the 6,650,000 personal returns
filed for the calendar year 1921, were
filed by individuals having incomes of not
Relief is also extended in a more limited
degree to individuals with higher incomes.
Surtaxes formerly began with 1 per cent.
at $6,000 and reached 50 per cent. at
$200,000. The rates now begin with 1
per cent. at $10,000 and increase to 40 per
cent at $500,000, the greatest benefit enuring
to incomes of $100,000 and over.
For the calendar year 1921 less than
one-half of one per cent. of the personal
returns filed reported income of the latter
Additional relief is given the taxpayer
through removing the limitation on the
exemption of $2,500 for married persons
and heads of families, the full deduction