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1900 - 1930

The New Era of the Income Tax

John Ballantine Niven established the offices of Touche Niven alongside Haskins & Sells in the Johnston Building at 30 Broad Street in 1900 in New York. At the time, fewer than 500 CPAs practiced in the United States. But a new area of accounting was soon to generate enormous demand for accounting professionals—the era of the income tax.

In 1913, Niven opened the organization's first branch offices in Minneapolis and Chicago. That same year, the 16th Amendment to the Constitution allowed income tax to be levied on Americans for the first time. Compared with modern levels, the 1913 rate of 1 percent on taxable incomes over $3,000, rising to 7 percent on taxable incomes over $500,000, may seem low. But, as the Journal of Accountancy noted that year, it was "indubitable that the income tax law is to have a more far-reaching effect upon public accountants than upon any other profession or business in the country.

"Hundreds of men who have never seen the necessity for a correct system of accounting," the Journal continued, "now find themselves compelled to prepare statements of income and expenditure; and the work in nine cases out of ten will fall upon the shoulders of the public accountants of the several states." The Journal was so convinced of the demands of the new legislation that it added a tax column—and asked Niven to be the editor. Under his direction, the column advised accountants of the requirements of income tax, preparing the profession for the impact of World War I, when federal spending rose from $742 million in 1916 to $18.9 billion in 1919. By then, income tax provided 58 percent of federal revenues, and the experts who handled income taxes found their skills in great demand.


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