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Posted on 15 April 2011 | 4,342 views

Millionaires and Taxes Before the 1929 Crash

The 1920s were fueled by “Easy Money” and was experiencing “Boom Times” like never before because the post-war recession was forgotten as everyone went on a spending spree. The “Introduction of Credit” in the 1920s, and not savings, enabled consumers to boost corporate profits to new levels.

With this new 1920s spending spree running full steam ahead, the growth in number of millionaires is shown in Tax Reports by the Treasury Department, who reported that there were:

21 individuals with an annual income of over one million dollars in 1921.
75 individuals with an annual income of over one million dollars in 1924.
207 individuals with an annual income of over one million dollars in 1926.
15,000 individuals with an annual income of over one million dollars in 1927.

Nearly four thousand of these new millionaires were living in New York in 1927, including three thousand living on or near Park Avenue and there was at least one billionaire (cumulative net worth) back in 1927.

By 1930, 513 individuals filed as millionaires on their tax returns.

In April 1913 President Woodrow Wilson set an income tax of 1% on incomes above $3,000 and applied surcharges between 2% and 7% on income from $20,000 to $500,000.

In 1914 the top tax rate was 7%,
In 1916 the top tax rate was 15%,
In 1916 the top tax rate was 67%,
In 1917 the top tax rate was 77%.

The top rate eventually fell to a low of 24% in 1929 but steadily increased again over the following decades.

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