Revenue Act of 1935 Enacts "Wealth Tax" on Highest Incomes

President Franklin D. Roosevelt signs the Revenue Act of 1935 (49 Stat. 1014) into law on August 30, 1935, over strong opposition from business, the wealthy, and conservatives from both parties, introducing the “Wealth Tax” as the first major New Deal effort to reform federal taxation toward progressive principles. The Act raises the top tax bracket from 63% to 79% for incomes over $5 million annually—affecting only one person, John D. Rockefeller—while pushing the maximum estate tax to 70% on transfers exceeding $50 million. The law introduces graduated corporate income taxes, raising the top rate from 13.75% to 15% with graduated surtaxes on corporate net income exceeding $50,000, publicly promoted as a tax on “bigness” with Roosevelt explaining that “the advantages and protections conferred upon corporations by Government increase in value as the size of the corporation increases.” The Act makes the richest one percent of taxpayers pay an average of 16.4% of their incomes, the highest rate until World War II, though 95% of American families continue paying no federal income taxes. Business community figures and affluent industrialists resent funding expansive federal programs they deem inefficient, denouncing Roosevelt as a “traitor to his class,” with opponents arguing the moralistic “economic royalist” framing ignores causal links between high marginal rates and diminished economic output. The proposal contributes to the emerging Democratic Party split between liberals and conservatives, worsening anti-Roosevelt sentiment among the wealthy and increasing business estrangement from the New Deal. Most historians agree the Act results in limited actual income redistribution, with some calling it “symbolic reform,” but it establishes the principle of progressive taxation that business interests will systematically dismantle, with Reagan’s 1981 Economic Recovery Tax Act cutting the top rate from 70% to 50% and the 1986 Tax Reform Act reducing it to 28%, demonstrating how New Deal regulatory victories created progressive economic policies that decades of corporate lobbying would reverse, enabling massive wealth concentration and inequality.