Federal income tax top marginal rate, historically

[Lithium381]

I'm sure everyone has seen the numbers and the graphs, they're easily located online. I got my numbers here: http://taxfoundation.org/article/us...-2011-nominal-and-inflation-adjusted-brackets

One thing I noticed while looking at this data is #1 the number of brackets that are used over time. During some years, there are 30 different brackets, in some such as the late 1980's there are only two! #2 is the value of the top rate. It used to be $5 million to be in top bracket, now it's a "mere" 350k, keep in mind that after inflation, that $5 million equates to $80+million today

By lowering the rate, but also lowering the threshold to pay that rate, the income is not reduced as much as some posters would lead you to believe. This should help put it into context.

The best way to raise more revenue is to elimiate complexities in the tax code! Well maybe not the best, but a very good way!

 

[Lithium381]

1913____7
1914____7
1915____7
1916____15
1917____67
1918____77
1919____73
1920____73
1921____73
1922____56
1923____56
1924____46
1925____25
1926____25
1927____25
1928____25
1929____24
1930____25
1931____25
1932____63
1933____63
1934____63
1935____63
1936____79
1937____79
1938____79
1939____79
1940____81.1
1941____81
1942____88
1943____88
1944____94
1945____94
1946____86.45
1947____86.45
1948____82.13
1949____82.13
1950____91
1951____91
1952____92
1953____92
1954____91
1955____91
1956____91
1957____91
1958____91
1959____91
1960____91
1961____91
1962____91
1963____91
1964____77
1965____70
1966____70
1967____70
1968____75.25
1969____77
1970____71.75
1971____70
1972____70
1973____70
1974____70
1975____70
1976____70
1977____70
1978____70
1979____70
1980____70
1981____69.125
1982____50
1983____50
1984____50
1985____50
1986____50
1987____38.5
1988____28
1989____28
1990____31
1991____31
1992____31
1993____39.6
1994____39.6
1995____39.6
1996____39.6
1997____39.6
1998____39.6
1999____39.6
2000____39.6
2001____38.6
2002____38.6
2003____35
2004____35
2005____35
2006____35
2007____35
2008____35
2009____35
2010____35
2011____35
2012____35

 

[Jhhnn]

Federal earned income rates basically do not apply to the ultra wealthy, like Mitt, whose incomes are derived from capital gains & dividends. They pay 15%, if that.

Citing top marginal rates is utterly inaccurate, anyway, as a variety of mechanisms have always existed to avoid paying them, not to mention that portions of income in lower brackets are taxed at the rate for that bracket. A very high earner pays no more on the first $50K of income than an earner who makes only $50K, deductions & filing status being equal.

As you offer, one of the chief features of Reaganomics has been pushing the tax burden down the scale, from the truly wealthy onto the upper middle class, and also the practice of subsidizing those at the tippy top by paying them interest on money borrowed by the govt rather than taking it as taxes. If I pay $1M in taxes but collect $500K in interest from the govt, I'm really only paying $500K.

 

[nehalem256]

Citing marginal tax rates is like looking at the thermostat of your house to determine the outside air temperature.

Eliminating complexity is the best way to make the tax code fair and raise revenue.

Should there be any surprise that those who can afford lobbyests, accountants, and lawyers are able to spin a complex tax code to their advantage.

 

[Matt1970]

As you offer, one of the chief features of Reaganomics has been pushing the tax burden down the scale, from the truly wealthy onto the upper middle class, and also the practice of subsidizing those at the tippy top by paying them interest on money borrowed by the govt rather than taking it as taxes. If I pay $1M in taxes but collect $500K in interest from the govt, I'm really only paying $500K.

Seeing as how the lower and middle tax brackets have been cut as well your statement is completely false.

 

[JS80]

Effective tax rates are the only rates that matter.

 

[Anarchist420]

I've always thought people who think that just a higher top marginal rate would give the government significantly more revenue are retarded. If the gov wants to raise more revenue, then taking away the 10% bracket (i.e., making the bottom marginal rate 15%) would do that. Taking out the 25% bracket and having 28% start there would also give the government more revenue. However, I hope that doesn't happen because the government can't be trusted today, just like it couldn't be trusted when Reagan raised taxes.

 

[Jhhnn]

Seeing as how the lower and middle tax brackets have been cut as well your statement is completely false.

Not when we consider that their share of national income has fallen proportionally, and that high earners gain the same benefit from that along with everybody else. Had median families' share of national income remained unchanged since 1980, they'd be earning ~40% more, and paying higher taxes on it.

JS80 is correct in offering that only effective tax rates matter, and I'd extend that to total taxes. It doesn't matter which govt entity collects them. They cut into the bottom line just the same.

 

[Lithium381]

Effective tax rates are the only rates that matter.

I hear you but the point of this thread is education. Many posters argue that "we should raise the rates on the rich, look, historically they were 90%!!!!! we should go back to that!"

Don't just mindlessly spout things you've heard, research them and find out the history behind them. Where the brackets cut off and the number of brackets are VERY significant. Also the reasons they are where they are, if you look at the years that they occurred.