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were satisfied that a good deal of evasion existed and they made many proposals for dealing with it, mainly in the direction of giving the assessing authorities more power to call for accounts and information from the taxpayer, including (with certain safeguards) the power to have access to original books of account.

Growth of the Tax.—The accompanying tables will give some idea of the growth of the tax from the year 1911-2 onwards. In drawing inferences from the figures given it is always necessary to bear in mind not only the alterations in the rate of tax but also the effect of the various legislative changes made during the years in question.

Income Tax (Excluding Supertax).

	Actual income liable to Tax before deduction of personal or family allowances and reliefs Million £	Income on which Tax was received	Net produce of Tax	Normal rate of Tax	Produce of each penny of the normal rate of Tax
		Million £	Million £	s. d.	£
1911-2	866	720	39	1 2	2,830,830
1912-3	907	755	41	1 2	2,969,591
1913-4	951	791	43	1 2	3,108,810
1914-5	985	814	63	1 8	3,169,614
1915-6	1050	873	118	3 0	3,299,034
1916-7	1373	981	201	5 0	3,360,612
1917-8	1631	1083	220	5 0	3,668,133
1918-9	2072	1287	303	6 0	4,217,088
1919-2	Not available	Not available	330[1]	6 0	4,580,000[1]
1920-1	do.	do.	350[1]	6 0	4,860,000[1]

Super-Tax

Amount of assessments, and number of persons charged, years 1911-2 to 1916-7; estimated income, yield, and numbers of persons chargeable for 1917-8, 1918-9 and 1919-20.

	Total income (including the first portion of income on which no super-tax is payable) Million £	Yield of the super-tax	Number of persons chargeable	Incomes chargeable
		£
1911-2	150	2,842,177	12,253	exceeding £5,000
1912-3	158	2,995,877	12,887	do.
1913-4	176	3,349,757	13,937	do.
1914-5	242	11,253,473	29,996	exceeding £3000
1915-6	231	19,621,262	29,299	do.
1916-7	261	21,697,019	31,985	do.
1917-8	296	25,500,000	35,250	do.
1918-9	350	40,000,000	48,000	exceeding £2,500
1919-20	410	46,000,000	56,000	do.

For 1920-1 and 1921-2 super-tax was charged on incomes exceeding £2,000; the estimated Exchequer receipt for 1920-1 was £55,281,000, and the number of persons chargeable was estimated at 81,000.

In the Finance Act of 1920 effect was given to some of the recommendations of the Royal Commission. Their suggestions were so numerous that they could only be carried into law by instalments, and the Finance Act, 1920, represented the first instalment. The new plan of differentiation, graduation and allowances was adopted in its entirety, and the relief proposed for double taxation within the Empire was also passed into law. At the same time the super-tax limit was brought down so as to include all incomes exceeding 2,000, and the super-tax rates increased, in close conformity with the suggestions of the commission.

A further instalment of the recommendations, dealing with the basis for assessment under Schedule D and with the machinery of administration, were embodied in a Revenue bill which was introduced in 1921 but was dropped for the session.

The Finance bill of 1921 contained no important income tax changes. The standard rate for 1921 remained at 6s. in the £, and the super-tax rates, on successive slices of income, were as they were fixed in 1920, viz:—

				s. d.
On the	first	£2,000	of the income	Nil
On the	next	£  500	(to £ 2,500)	1 6
On the	next	£  500	(to £ 3,000)	2 0
On the	next	£1,000	(to £ 4,000)	2 6
On the	next	£1,000	(to £ 5,000)	3 0
On the	next	£1,000	(to £ 6,000)	3 6
On the	next	£1,000	(to £ 7,000)	4 0
On the	next	£1,000	(to £ 8,000)	4 6
On the	next	£12,000	(to £20,000)	5 0
On the	next	£10,000	(to £30,000)	5 6
On the	remainder		(above £30,000)	6 0

The effective rates of income tax (combined with super-tax) on selected incomes are shown in the following table:—

Actual total  Income	Single Persons		Married Couples without children		Married Couples entitled to allowance for 3 children
	If Income  all “Earned”  Income	If Income  all “Investment”  Income	If Income  all “Earned”  Income	If Income  all “Investment”  Income	If Income  all “Earned”  Income	If Income  all “Investment”  Income
£	s. d.	s. d.	s. d.	s. d.	s. d.	s. d.
200	8	11½	Nil	Nil	Nil	Nil
300	1  4	1  8	5½	9	Nil	Nil
400	1  8	2  3½	1  0	1  4	4	7½
600	2 11	3  6½	2  0½	2  7½	1  1½	1  8½
800	3  6½	4  1½	2 10½	3  5½	2  2½	2  9½
1,000	3 11	4  6	3  4½	3 11½	2 10	3  5
2,000	4  8	5  3	4  4½	5  0	4  1½	4  8½
3,000	5  8	6  1	5  6	5 11	5  4	5  9
4,000	6  5	6  8	6  3	6  7	6  1	6  5
5,000	6 11	7  2	6 10	7  1	6  8	6 11
6,000	7  4	7  7	7  3	7  5	7  2	7  4
8,000	8  1	8  3	8  0	8  2	7 11	8  1
10,000	8  8	8  9	8  7	8  9	8  7	8  8
25,000	10  2	10  3	10  2	10  2	10  1	10  2
50,000	11  0	11  1	11  0	11  1	11  0	11  0
100,000	11  6	11  6	11  6	11  6	11  6	11  6

On incomes above £100,000 the effective rate continued to progress, approximating to 12s. in the £ on the highest incomes.

Bibliography. Professor Seligman, The Income Tax, second edition, 1914; Sir J. C. Stamp, British Incomes and Property, 1916, and Fundamental Principles of Taxation, 1921; Dowell's Income Tax Laws, eighth edition, 1919; Report of the Royal Commission on the Income Tax, 1920 (Cmd. 615); 63rd Annual Report of the Board of Inland Revenue, for the year ended March 31 1920 (Cmd. 1,083 of 1920). (H. M. Sa.)

II. United States

Although taxes on gains and profits derived from personal ability as distinguished from property—the so-called “faculty taxes”—were employed in the American colonies before the middle of the 17th century, no successful use of the general income tax was made in the United States until the Civil War; and the income taxes then adopted were soon thereafter repealed or fell into practical disuse. The demand for effective income taxation, however, showed great vitality. It kept moribund income-tax laws on the statute books in several states, led to abortive experiment with the tax, particularly in the “forties” and “nineties,” and finally in 1909 resulted in the adoption of a Federal excise tax “with respect to the carrying on or doing business” by corporations, equivalent to 1% of the annual net income over and above $5,000. This proved to be in substance an effective income tax.

In 1911 (after the adoption of an empowering amendment to its constitution in 1908), the state of Wisconsin passed a general income-tax law applicable to individuals, partnerships and corporations; and the practical success of this tax encouraged other states to adopt similar laws or to vitalize the administration of unsuccessful income taxes already on the statute books. The following states now use the modern income tax: Wisconsin, Massachusetts, Connecticut (corporations only), New York, Oklahoma (personal incomes only), West Virginia (corporations only), Missouri, Virginia, Delaware (personal incomes only), North Dakota, North Carolina, and Montana (corporations only). On Feb. 25 1913 the foundation for the Federal system of income taxation was laid by the ratification of the Sixteenth Amendment, which provided as follows:—

1. These figures are only estimates. For 1921-2 the estimated produce of each penny was £5,000,000.