New York, 1913. Photo credit:

According to, only a few Americans used to have to pay income tax. Here is how that changed. Source:

Before World War II
New York, 1913. Photo credit:

Before 1940, only seven percent of Americans paid income tax.

War and taxes
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Fighting in a war is extremely expensive for a nation, and World War II was no exception.

American leaders decided Americans would have to pay higher taxes and that more people would have to pay them.

The Revenue Act of 1942
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This act increased taxes on all incomes and lowered personal exemptions.

The changes pushed 13 million more people into the tax system.

Corporate tax increases
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The Revenue Act of 1942 also increased the corporate tax rate by almost ten percent.

Pay-as-you-go taxes
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Originally the tax system had citizens paying taxes only at the end of the year, which meant that the government was only getting money at certain times.

Beardsley Ruml, chairman of the Federal Reserve Bank of New York introduced the idea of making installments on taxes, rather than pay them all at once.

Tax Payment Act of 1943
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This act instituted the installment system that is now the standard for American taxes.

7 percent to 64 percent
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By 1944, 64 percent of Americans, or about 42 million people, paid income taxes.

Today about 50 percent of people pay income taxes
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According to, about 50 percent of Americans pay no income tax. Some say this is an issue that must be dealt with soon. In 2000, there were only 34 percent of Americans who paid no income tax.