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Federal Personal Income Tax Policy in the 1920s

Published online by Cambridge University Press:  03 March 2009

Gene Smiley
Professor of Economics, Marquette University, 606 N. 13 Street, Milwaukee, Wisconsin 53233.
Richard H. Keehn
Professor of Economics, University of Wisconsin-Parkside, Department of Economics, Box No. 2000, Kenosha, Wisconsin 53141–2000.


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.

Papers Presented at the Forty-Fourth Annual Meeting of the Economic History Association
Copyright © The Economic History Association 1995

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