6 ms·

US Historical Income Tax Rates

24 points by hairytrog 4y ago

donatj 4y ago
I don't understand why we don't just not tax income below say $20k. It can't be a lot of money for the government even in aggregate, and it would make a huge difference in low income people's lives, arguably larger than any of the government programs their taxes are going to fund.
- oh_sigh 4y ago
  That's what the standard deduction does. For example, 57% of households did not pay any federal income tax in 2021: https://www.cnbc.com/2022/03/25/57percent-of-us-households-paid-no-federal-income-tax-in-2021-study.html https://www.cnbc.com/2022/03/25/57percent-of-us-households-p... That's not even from COVID, the percentages are fairly similar going back a number of years.
- deleted 4y ago
  [deleted]
- csdvrx 4y ago
  > I don't understand why we don't just not tax income below say $20k. Because you want people to feel like they have skin in the game.
  - rootusrootus 4y ago
    I wonder if they'd feel better about that if they could instead earn enough where they actually had to pay income tax. It's not much consolation that you have skin in the game if you can only get 15 bucks an hour.
    - csdvrx 4y ago
      With the deductions it cost nothing, but it gets then the same feeling, and a visibility of how it works should they start making more money.
- decebalus1 4y ago
  This is easy. Because we have a well-established institutional hate for poor people. There is a subconscious belief that poor people are poor solely because of poor decisions. So, it's not our job to improve their lives. It would be 'unfair' for the rest of society to keep these 'freeloaders' afloat. /s There's gonna be a lot of comments in here saying ^^ but unironically. It's just ingrained in the fabric of our society.
  - deleted 4y ago
    [deleted]
- whiddershins 4y ago
  I don’t disagree. And I think what with various subsidies and whatnot it may be that the effective tax rate for people making that little is zero. Two theories: 1) Maybe it’s better for everyone to feel like they are ‘chipping in’ … for pride and unity. 2) Maybe the government is really invested in knowing what everyone makes, regardless of the net on it.
  - tapland 4y ago
    Also avoiding the "they don't even pay taxes" talk about people with low incomes.
- antognini 4y ago
  The rates presented are slightly misleading because it's not including the standard deduction. For a single individual in 2021, income below $12,550 is effectively not taxed (or $25,100 for married couples).
  - hnburnsy 4y ago
    The tax brackets are always based on AGI, millions have an effective negative tax rate due to EITC.
- tick_tock_tick 4y ago
  I mean we basically don't 12% of $20k (ignore marginal rates just taking the top braket) is $2.4k and the standard deduction is $12,400 for single filers.
- closeparen 4y ago
  If you would consider $12,400 a value of "say $20k" this is already the case... and the tax rate on the remaining $7600 is 10%. Someone earning $20k qualifies for other benefits worth more than $760, so their total effective tax rate is already negative.
- next_xibalba 4y ago
  This is already the case and has been for quite some time. The table depicted at the link is shows tax rates before deductions. Think of it as a "top line" or "nominal" tax rate. People making under $20k (and more) have an effective tax rate of $0 in the USA. As Mitt Romney pointed out in 2012 [1]: "Forty-seven percent of Americans pay no income tax." [1] https://www.politifact.com/factchecks/2012/sep/18/mitt-romney/romney-says-47-percent-americans-pay-no-income-tax/ https://www.politifact.com/factchecks/2012/sep/18/mitt-romne...
  - modeless 4y ago
    With the earned income tax credit, many people at that income level "pay" negative income tax.
  - datavirtue 4y ago
    It is often negative.
- protomyth 4y ago
  If some politician really wanted to make a difference, then move FICA (employee not employer) to start at something like $30k and continue higher before the cutoff, then add a tax after a million to cover the low income folks' FICA. Then make the individual deduction $30k. I am really opposed to taxing things that aren't actually realized (stock). The number of horror stories on HN about stock options just leads me to believe we do it wrong. I would rather we do a better job on the transaction to cash out.
- CaptainNegative 4y ago
  The key problem for <$20k earners is the constant 7.65% FICA ("Social Security/Medicare") Tax plus any local taxes, not income tax. After the standard deduction, the net income tax rate for a single filer making $20k is 3.75%. For a couple filing jointly it's 0 up through $25.5k/yr. In both cases, the EITC guarantees those with at least one child a (substantially) negative effective tax rate, while single child-free filers are left with about a 2.6% effective rate.
  - SomeHacker44 4y ago
    $20k x 2 >> $25.5k. Marriage penalty in action.
    - CaptainNegative 4y ago
      The post-deduction income tax rate for a MFJ household making $40k is also 3.75%. There are some examples of a marriage penalty -- and others of a marriage benefit -- but this isn't an example of either one of them.
- Gustomaximus 4y ago
  We do this in Australia (($18,200). It largely works well. The downside is people can use others tax free threshold. E.g. If someone is working and is married to housewife plus has a couple kids at uni, if they have a business or assets in trust they can distribute $20k to each person so now they have $80k effectively tax free. I'm not sure the scale of this being taken advantage off though but it's well know benifit if you situation allows.
  - chrismcb 4y ago
    This should not be a problem. Basically you are saying each person gets 20k tax free. If one person is earning and supporting the other then yeah they should get 40k tax free. But if they are both working they will still only get 40k tax free.
giantg2 4y ago
Interesting. I think it would be more impactful/meaningful if it also had columns for inflation adjustment, income distribution, and average effective tax rate. It seems like when it first started, it only taxed the rich and at a very low rate. Then it expanded from there, to the point where 20% was the min and 91% was the max. Then lower to what we have now.
- HarryHirsch 4y ago
  Nowadays you get taxed because your mate lent you 1200 dollars through Venmo because you couldn't make the security deposit for the new overpriced apartment. (Of course your mate will be taxed as well when you repay him.) But Jeff Bezos can borrow against stock that he owns. Income tax is completely meaningless when the 1%-ers have tax evasion strategies that Joe Citizen couldn't possible take advantage of.
  - oh_sigh 4y ago
    I'd encourage you to actually research how any of this works, because you are extremely misinformed and parroting the same lines that I see repeated verbatim around the internet by other misinformed people(ie "Bezos can just borrow against stock he owns and never pay any taxes!").
    - giantg2 4y ago
      Do you have a link or can give a brief explanation? How the loans work that you say we don't understand?
      - oh_sigh 4y ago
        Not really, because I have no idea the extent of ignorance I'm dealing with. A simple question would be - how does the loan ever get paid off? A simple point would be that not paying taxes on loans is not some crazy loophole that only the rich have access to. Literally anyone who has ever taken out a mortgage for a house or a loan for a car has taken advantage of this - I'd guess at least 80% of adults in America have a car or home loan.
insickness 4y ago
Graph: Historical Marginal Tax Rate for Highest and Lowest Income Earners https://commons.wikimedia.org/wiki/File:Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg https://commons.wikimedia.org/wiki/File:Historical_Marginal_...
- revnode 4y ago
  - mymllnthaccount 4y ago
    How is it deceptive when it clearly states that is what it is doing?
    - revnode 4y ago
      Charts can be deceptive even if the axes are clearly labeled. It's deceptive exactly for the reasons I stated. It excludes the majority of the data from the chart.
      - chrismcb 4y ago
        The chart isn't deceptive. It clearly states what it is. You can USE it deceptively. But that didn't mean the chart itself is deceptive. In this particular case the idea is to compare the top earners to the lowest earners. The middle isn't important.
  - rootusrootus 4y ago
    > Who cares about the extremes? What fraction of taxpayers pay the minimum rate?
    - datavirtue 4y ago
      Every single one of them according to the charts.
  - 4y ago
tick_tock_tick 4y ago
Honestly kinda worthless without knowing the average marginal rate that people in each income brackets payed. People always hype up the 90% tax bracket but tax deductions and credits were so plentiful that the raw rates are very misleading.
- cplusplusfellow 4y ago
  Not to mention it was still a society where one could legitimately hide income from the government with ease.
frabjoused 4y ago
In 1944 the Federal income tax rate was as high as 94% for those making more than $200,000.
- floren 4y ago
  Posters will now stumble over each other to assure you that tax evasion was so widespread that actually the effective tax rate was lower than Reagan's wildest dreams.
  - throwaway0a5e 4y ago
    >Posters will now stumble over each other to assure you that tax evasion was so widespread Arranging your income to reduce the tax paid in accordance with the law isn't tax evasion.
    - cplusplusfellow 4y ago
      I’m pretty sure the rationale given by current politicians for at-present proposals is that they are arranging their income to avoid taxes, and therefore they aren’t paying their “fair” share. It’s nauseating but evasion (a legal term) and avoidance are taken as the same morally compromised position now.
      - chrismcb 4y ago
        Tax evasion is illegal and can get you thrown in jail. Tax avoidance is legal. And much everyone tries to avoid as much taxes as possible.
  - credit_guy 4y ago
    All right, then I'll ask the other question. What do you consider "fair"? You don't say it, and the GP doesn't, but the implicit assertion is that the rich don't pay their "fair share", presumably because in some mythological past they used to pay 94%. What is then "fair"? 94% ? Do you have a formula? At least a principle. If I make $100 MM (I don't), should I pay 50%, 60%, 70%? I mean, even if I pay 99%, I still retain more than 99% of the Americans, right?
6gvONxR4sf7o 4y ago
I'd love to see these state-wise as well. Looking at the highest ever federal rate and adding my current california rate would put the total marginal rate at 103%. It's actually kind of amusing to think about what a marginal rate over 100% would lead to. If the top bracket is $1M+ and you earn $100M, and that last $99M is taxed at 102%, then you owe roughly $101M of your $100M earned, leaving you negative for the year. Better not go above the max! Quick! Donate that $99M in order to maximize your earnings!
- diggernet 4y ago
  Then in future years, make sure to avoid the problem by furloughing all your workers as soon as you hit $1M. Sure, that means both you and your workers only work 1/100 of the year, but what's the point in working longer than that if it earns you nothing? Yeah, you could also pay your workers a lot more and take less yourself. But in that case you'd spend the whole year working to make what you could make in 1/100 of the year. So again, what's the point? So I suspect a >100% (or even >90%) marginal tax rate would have a lot of very negative side effects. (Keep in mind that back when the top rate was officially >90%, there were so many loopholes that nobody actually paid that. Closing the loopholes and drastically lowering the top rate was actually revenue-neutral.)
  - 6gvONxR4sf7o 4y ago
    > furloughing all your workers as soon as you hit $1M You'd likely have a hard time getting them to come back the next year. Who is going to take a job that pays a normal daily wage but only employs you for three days? And can you really ramp the org back up up in three days? Maybe you'd be better off working for a few days then handing the job off to someone else for the rest of the year. Even then, good luck convincing the board that you're doing anything worthwhile coming in 3 days per year. I think the equilibrium for this would be fascinating.
BurningFrog 4y ago
A reminder that comparing old tax rates with modern ones is very hard, since there was a huge amount of deductions available for the high income earners, and hardly anyone actually paid anywhere near the nominal 91%.
- qeternity 4y ago
  It's also arithmetically impossible to pay the highest bracket given that it's a marginal tax rate.
  - chrismcb 4y ago
    Huh? This makes no sense. If you made over 400k you were in the guest tax bracket Yes, b you wouldn't pay 91% of your income but you would pay 91% of everything over 400k.
- throwaway0a5e 4y ago
  And there were fewer taxes and government income streams so single big taxes (like income tax) represented a larger share of an individual's overall tax burden.
arrty88 4y ago
Now adjust those 1990 numbers for inflation
SpodGaju 4y ago
1950 Tax Rate - 91.0% > $400,000 The economy overall grew by 37% during the 1950s. At the end of the decade, the median American family had 30% more purchasing power than at the beginning. Inflation was minimal, in part because of Eisenhower's efforts to balance the federal budget. Unemployment remained low, about 4.5%.
- nojito 4y ago
  No one paid that tax rate. https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ Average rate paid by the 1% back then was around 41%
  - SpodGaju 4y ago
    Apples, meet oranges. "The data comes from a recent paper by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman that attempts to account for all federal, state, and local taxes paid by different groups of Americans over the last 100 years" But regardless, it was higher in 1950, almost 6 points higher. And look at al the caveats... 1] Some of the distributional assumptions in the Piketty, Saez, and Zucman paper are questionable. In particular, the authors assume that the full burden of the corporate income tax falls on owners of capital, which may not be correct. However, the authors note that they “have tested a number of alternative tax incidence assumptions, and found only second-order effects.” [3] It is worth noting that, per the Piketty, Saez, and Zucman data, the tax rates of the top 0.1 and 0.01 percent of taxpayers have dropped substantially since the 1950s. The average tax rate on the 0.1 percent highest-income Americans was 50.6 percent in the 1950s, compared to 39.8 percent today. The average tax rate on the top 0.01 percent was 55.3 percent in the 1950s, compared to 40.8 percent today. [4] The data from Piketty, Saez, and Zucman is not divided among federal, state, and local taxes, so it is difficult to tell exactly how much the rich were paying in federal income taxes specifically during this period.
    - nojito 4y ago
      >But regardless, it was higher in 1950, almost 6 points higher. Sure, but you're being quite disingenuous with your post by suggesting that tax rates were any different back then compared to now.
throwaway0a5e 4y ago
Ok, now do the effective rates paid. Better yet, do overall tax burden rather than just income tax. Everyone loves to get a good ideological circle jerk going over the nominal 1950s rates but the actual tax burden at (various different points on the income spectrum) paints a very, very, different picture.
- Volundr 4y ago
  > the actual tax burden at (various different points on the income spectrum) paints a very, very, different picture. Do you have this data? I'd be very interested in this picture.
hackeraccount 4y ago
The raw rate tells you something but not everything. What are the available deductions? What counts as income?

24 points by hairytrog 4y ago

I don't understand why we don't just not tax income below say $20k. It can't be a lot of money for the government even in aggregate, and it would make a huge difference in low income people's lives, arguably larger than any of the government programs their taxes are going to fund.

oh_sigh 4y ago
That's what the standard deduction does. For example, 57% of households did not pay any federal income tax in 2021: https://www.cnbc.com/2022/03/25/57percent-of-us-households-paid-no-federal-income-tax-in-2021-study.html https://www.cnbc.com/2022/03/25/57percent-of-us-households-p... That's not even from COVID, the percentages are fairly similar going back a number of years.
deleted 4y ago
[deleted]
csdvrx 4y ago
> I don't understand why we don't just not tax income below say $20k. Because you want people to feel like they have skin in the game.
- rootusrootus 4y ago
  I wonder if they'd feel better about that if they could instead earn enough where they actually had to pay income tax. It's not much consolation that you have skin in the game if you can only get 15 bucks an hour.
  - csdvrx 4y ago
    With the deductions it cost nothing, but it gets then the same feeling, and a visibility of how it works should they start making more money.
decebalus1 4y ago
This is easy. Because we have a well-established institutional hate for poor people. There is a subconscious belief that poor people are poor solely because of poor decisions. So, it's not our job to improve their lives. It would be 'unfair' for the rest of society to keep these 'freeloaders' afloat. /s There's gonna be a lot of comments in here saying ^^ but unironically. It's just ingrained in the fabric of our society.
- deleted 4y ago
  [deleted]
whiddershins 4y ago
I don’t disagree. And I think what with various subsidies and whatnot it may be that the effective tax rate for people making that little is zero. Two theories: 1) Maybe it’s better for everyone to feel like they are ‘chipping in’ … for pride and unity. 2) Maybe the government is really invested in knowing what everyone makes, regardless of the net on it.
- tapland 4y ago
  Also avoiding the "they don't even pay taxes" talk about people with low incomes.
antognini 4y ago
The rates presented are slightly misleading because it's not including the standard deduction. For a single individual in 2021, income below $12,550 is effectively not taxed (or $25,100 for married couples).
- hnburnsy 4y ago
  The tax brackets are always based on AGI, millions have an effective negative tax rate due to EITC.
tick_tock_tick 4y ago
I mean we basically don't 12% of $20k (ignore marginal rates just taking the top braket) is $2.4k and the standard deduction is $12,400 for single filers.
closeparen 4y ago
If you would consider $12,400 a value of "say $20k" this is already the case... and the tax rate on the remaining $7600 is 10%. Someone earning $20k qualifies for other benefits worth more than $760, so their total effective tax rate is already negative.
next_xibalba 4y ago
This is already the case and has been for quite some time. The table depicted at the link is shows tax rates before deductions. Think of it as a "top line" or "nominal" tax rate. People making under $20k (and more) have an effective tax rate of $0 in the USA. As Mitt Romney pointed out in 2012 [1]: "Forty-seven percent of Americans pay no income tax." [1] https://www.politifact.com/factchecks/2012/sep/18/mitt-romney/romney-says-47-percent-americans-pay-no-income-tax/ https://www.politifact.com/factchecks/2012/sep/18/mitt-romne...
- modeless 4y ago
  With the earned income tax credit, many people at that income level "pay" negative income tax.
- datavirtue 4y ago
  It is often negative.
protomyth 4y ago
If some politician really wanted to make a difference, then move FICA (employee not employer) to start at something like $30k and continue higher before the cutoff, then add a tax after a million to cover the low income folks' FICA. Then make the individual deduction $30k. I am really opposed to taxing things that aren't actually realized (stock). The number of horror stories on HN about stock options just leads me to believe we do it wrong. I would rather we do a better job on the transaction to cash out.
CaptainNegative 4y ago
The key problem for <$20k earners is the constant 7.65% FICA ("Social Security/Medicare") Tax plus any local taxes, not income tax. After the standard deduction, the net income tax rate for a single filer making $20k is 3.75%. For a couple filing jointly it's 0 up through $25.5k/yr. In both cases, the EITC guarantees those with at least one child a (substantially) negative effective tax rate, while single child-free filers are left with about a 2.6% effective rate.
- SomeHacker44 4y ago
  $20k x 2 >> $25.5k. Marriage penalty in action.
  - CaptainNegative 4y ago
    The post-deduction income tax rate for a MFJ household making $40k is also 3.75%. There are some examples of a marriage penalty -- and others of a marriage benefit -- but this isn't an example of either one of them.
Gustomaximus 4y ago
We do this in Australia (($18,200). It largely works well. The downside is people can use others tax free threshold. E.g. If someone is working and is married to housewife plus has a couple kids at uni, if they have a business or assets in trust they can distribute $20k to each person so now they have $80k effectively tax free. I'm not sure the scale of this being taken advantage off though but it's well know benifit if you situation allows.
- chrismcb 4y ago
  This should not be a problem. Basically you are saying each person gets 20k tax free. If one person is earning and supporting the other then yeah they should get 40k tax free. But if they are both working they will still only get 40k tax free.

giantg2 4y ago

Interesting. I think it would be more impactful/meaningful if it also had columns for inflation adjustment, income distribution, and average effective tax rate. It seems like when it first started, it only taxed the rich and at a very low rate. Then it expanded from there, to the point where 20% was the min and 91% was the max. Then lower to what we have now.

HarryHirsch 4y ago
Nowadays you get taxed because your mate lent you 1200 dollars through Venmo because you couldn't make the security deposit for the new overpriced apartment. (Of course your mate will be taxed as well when you repay him.) But Jeff Bezos can borrow against stock that he owns. Income tax is completely meaningless when the 1%-ers have tax evasion strategies that Joe Citizen couldn't possible take advantage of.
- oh_sigh 4y ago
  I'd encourage you to actually research how any of this works, because you are extremely misinformed and parroting the same lines that I see repeated verbatim around the internet by other misinformed people(ie "Bezos can just borrow against stock he owns and never pay any taxes!").
  - giantg2 4y ago
    Do you have a link or can give a brief explanation? How the loans work that you say we don't understand?
    - oh_sigh 4y ago
      Not really, because I have no idea the extent of ignorance I'm dealing with. A simple question would be - how does the loan ever get paid off? A simple point would be that not paying taxes on loans is not some crazy loophole that only the rich have access to. Literally anyone who has ever taken out a mortgage for a house or a loan for a car has taken advantage of this - I'd guess at least 80% of adults in America have a car or home loan.

insickness 4y ago

Graph: Historical Marginal Tax Rate for Highest and Lowest Income Earners https://commons.wikimedia.org/wiki/File:Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg https://commons.wikimedia.org/wiki/File:Historical_Marginal_...

revnode 4y ago
- mymllnthaccount 4y ago
  How is it deceptive when it clearly states that is what it is doing?
  - revnode 4y ago
    Charts can be deceptive even if the axes are clearly labeled. It's deceptive exactly for the reasons I stated. It excludes the majority of the data from the chart.
    - chrismcb 4y ago
      The chart isn't deceptive. It clearly states what it is. You can USE it deceptively. But that didn't mean the chart itself is deceptive. In this particular case the idea is to compare the top earners to the lowest earners. The middle isn't important.
- rootusrootus 4y ago
  > Who cares about the extremes? What fraction of taxpayers pay the minimum rate?
  - datavirtue 4y ago
    Every single one of them according to the charts.
- 4y ago

tick_tock_tick 4y ago

Honestly kinda worthless without knowing the average marginal rate that people in each income brackets payed. People always hype up the 90% tax bracket but tax deductions and credits were so plentiful that the raw rates are very misleading.

cplusplusfellow 4y ago
Not to mention it was still a society where one could legitimately hide income from the government with ease.

frabjoused 4y ago

In 1944 the Federal income tax rate was as high as 94% for those making more than $200,000.

floren 4y ago
Posters will now stumble over each other to assure you that tax evasion was so widespread that actually the effective tax rate was lower than Reagan's wildest dreams.
- throwaway0a5e 4y ago
  >Posters will now stumble over each other to assure you that tax evasion was so widespread Arranging your income to reduce the tax paid in accordance with the law isn't tax evasion.
  - cplusplusfellow 4y ago
    I’m pretty sure the rationale given by current politicians for at-present proposals is that they are arranging their income to avoid taxes, and therefore they aren’t paying their “fair” share. It’s nauseating but evasion (a legal term) and avoidance are taken as the same morally compromised position now.
    - chrismcb 4y ago
      Tax evasion is illegal and can get you thrown in jail. Tax avoidance is legal. And much everyone tries to avoid as much taxes as possible.
- credit_guy 4y ago
  All right, then I'll ask the other question. What do you consider "fair"? You don't say it, and the GP doesn't, but the implicit assertion is that the rich don't pay their "fair share", presumably because in some mythological past they used to pay 94%. What is then "fair"? 94% ? Do you have a formula? At least a principle. If I make $100 MM (I don't), should I pay 50%, 60%, 70%? I mean, even if I pay 99%, I still retain more than 99% of the Americans, right?

6gvONxR4sf7o 4y ago

I'd love to see these state-wise as well. Looking at the highest ever federal rate and adding my current california rate would put the total marginal rate at 103%. It's actually kind of amusing to think about what a marginal rate over 100% would lead to. If the top bracket is $1M+ and you earn $100M, and that last $99M is taxed at 102%, then you owe roughly $101M of your $100M earned, leaving you negative for the year. Better not go above the max! Quick! Donate that $99M in order to maximize your earnings!

diggernet 4y ago
Then in future years, make sure to avoid the problem by furloughing all your workers as soon as you hit $1M. Sure, that means both you and your workers only work 1/100 of the year, but what's the point in working longer than that if it earns you nothing? Yeah, you could also pay your workers a lot more and take less yourself. But in that case you'd spend the whole year working to make what you could make in 1/100 of the year. So again, what's the point? So I suspect a >100% (or even >90%) marginal tax rate would have a lot of very negative side effects. (Keep in mind that back when the top rate was officially >90%, there were so many loopholes that nobody actually paid that. Closing the loopholes and drastically lowering the top rate was actually revenue-neutral.)
- 6gvONxR4sf7o 4y ago
  > furloughing all your workers as soon as you hit $1M You'd likely have a hard time getting them to come back the next year. Who is going to take a job that pays a normal daily wage but only employs you for three days? And can you really ramp the org back up up in three days? Maybe you'd be better off working for a few days then handing the job off to someone else for the rest of the year. Even then, good luck convincing the board that you're doing anything worthwhile coming in 3 days per year. I think the equilibrium for this would be fascinating.

BurningFrog 4y ago

A reminder that comparing old tax rates with modern ones is very hard, since there was a huge amount of deductions available for the high income earners, and hardly anyone actually paid anywhere near the nominal 91%.

qeternity 4y ago
It's also arithmetically impossible to pay the highest bracket given that it's a marginal tax rate.
- chrismcb 4y ago
  Huh? This makes no sense. If you made over 400k you were in the guest tax bracket Yes, b you wouldn't pay 91% of your income but you would pay 91% of everything over 400k.
throwaway0a5e 4y ago
And there were fewer taxes and government income streams so single big taxes (like income tax) represented a larger share of an individual's overall tax burden.

arrty88 4y ago

Now adjust those 1990 numbers for inflation

SpodGaju 4y ago

1950 Tax Rate - 91.0% > $400,000 The economy overall grew by 37% during the 1950s. At the end of the decade, the median American family had 30% more purchasing power than at the beginning. Inflation was minimal, in part because of Eisenhower's efforts to balance the federal budget. Unemployment remained low, about 4.5%.

nojito 4y ago
No one paid that tax rate. https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ Average rate paid by the 1% back then was around 41%
- SpodGaju 4y ago
  Apples, meet oranges. "The data comes from a recent paper by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman that attempts to account for all federal, state, and local taxes paid by different groups of Americans over the last 100 years" But regardless, it was higher in 1950, almost 6 points higher. And look at al the caveats... 1] Some of the distributional assumptions in the Piketty, Saez, and Zucman paper are questionable. In particular, the authors assume that the full burden of the corporate income tax falls on owners of capital, which may not be correct. However, the authors note that they “have tested a number of alternative tax incidence assumptions, and found only second-order effects.” [3] It is worth noting that, per the Piketty, Saez, and Zucman data, the tax rates of the top 0.1 and 0.01 percent of taxpayers have dropped substantially since the 1950s. The average tax rate on the 0.1 percent highest-income Americans was 50.6 percent in the 1950s, compared to 39.8 percent today. The average tax rate on the top 0.01 percent was 55.3 percent in the 1950s, compared to 40.8 percent today. [4] The data from Piketty, Saez, and Zucman is not divided among federal, state, and local taxes, so it is difficult to tell exactly how much the rich were paying in federal income taxes specifically during this period.
  - nojito 4y ago
    >But regardless, it was higher in 1950, almost 6 points higher. Sure, but you're being quite disingenuous with your post by suggesting that tax rates were any different back then compared to now.

throwaway0a5e 4y ago

Ok, now do the effective rates paid. Better yet, do overall tax burden rather than just income tax. Everyone loves to get a good ideological circle jerk going over the nominal 1950s rates but the actual tax burden at (various different points on the income spectrum) paints a very, very, different picture.

Volundr 4y ago
> the actual tax burden at (various different points on the income spectrum) paints a very, very, different picture. Do you have this data? I'd be very interested in this picture.

hackeraccount 4y ago

The raw rate tells you something but not everything. What are the available deductions? What counts as income?