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Show HN: Calculator for US individual income tax, from 1970-present

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Re: Show HN: Calculator for US individual income tax, from 1970-present

#131

Post by cupofpython »

wil421 wrote: post #121
khuey wrote: post #74

Earlier quoted context omitted.

On the individual side, all personal interest (e.g. credit card interest) was deductible and you could claim dependents (and their corresponding deductions) without any evidence (like a child's social security number).

People can still claim children without any evidence. I worked with a cook who claimed like 6 or 7 kids. He never filed taxes at the end of the year so he didn’t need a SSN for them.

this is just called tax evasion

back then you could file your taxes with 6 or 7 kids and no one would check

that is not the same as claiming you have 6 or 7 kids that will be filed on your taxes and then just never filing it. Once filed he would need SSN for those kids, or he would owe taxes

Re: Show HN: Calculator for US individual income tax, from 1970-present

#132

Post by mywittyname »

tick_tock_tick wrote: post #15

This seems beyond misleading it doesn't even have a method to enter most of the now illegal methods to lower your tax bill. Tax straddles were only banned in 1977 before that you should have easily been able to more then halve your tax bill with futures.

I've never heard of tax straddles, but they sound an awful lot like what we now call "tax loss harvesting."

> For example, an investor with a capital gain manipulates investments to create an artificial loss from an unrelated transaction to offset their gain in a current year, and postpone the gain till the following tax year.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#133

Post by MaxGhenis »

nomilk wrote: post #94
MaxGhenis wrote: post #57

Fantastic job making taxsim more accessible! We've built an open-source version of taxsim called OpenFisca US [1] which we expose in our (also open-source) web app, PolicyEngine US [2]. We haven't yet implemented all of taxsim—we only have the most recent couple of years, and not all states—but we have some advantages like implementing means-tested benefits and being able to simulate custom tax and benefit reforms, b…

This looks great. Some quick examples of how to use it in the readme would give users a quick and easy way of exploring what it can do.

Thanks for the suggestion, I added a link to our documentation (https://openfisca.us) to the readme.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#134

Post by ameister14 »

hammock wrote: post #59
jandrewrogers wrote: post #21

Earlier quoted context omitted.

In the 1970s there were massive tax deductions that don't exist today, so the actual tax incidence was much lower than what is implied by the marginal tax rates. There was a major overhaul of the tax code in the 1980s that simultaneously eliminated many of the tax deductions and offset that loss of deductions with lower the marginal tax rates. The change was approximately revenue neutral but made the tax code simpler…

What were the biggest deductions that don’t exist today?

So there were a few.

One of the biggest was that there was an investment tax credit of 7% in the 60's and 10% in the 70's, which I believe was uncapped. I think those were also able to be rolled over to cover multiple years. That means that if you invested enough, you could pay essentially no taxes. This was repealed in 1986.

[edit] Another that I should probably mention is the treatment of asset depreciation; in the 1960's and 70's the government was incredibly generous with regards to asset depreciation. For example, they allowed more rapid depreciation so you can have assets fully depreciated while still within their useful life and potentially if you sold those would pay capital gains tax on them, meaning you reaped significant tax savings over the asset's lifetime.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#135

Post by ameister14 »

nly wrote: post #114
petercooper wrote: post #49

The US personal tax code looks extremely complicated to British eyes, but British people have a similar calculator at their disposal at https://listentotaxman.com/ though it only goes back to 2000.

The thing I find interesting is Americans always claim that countries with socialised healthcare have significantly higher tax burdens, but if you compare take home salaries between say New York and London, or San Fransisco and London, they're not that far apart. That said, in tech Americans seem to make 50%-100% more total comp on a cost of living adjusted basis doing exactly the same job...

Agreed. US also doesn't have VAT, though, which makes a fair bit of difference. State sales taxes vary but the highest is less than half the British VAT. Individual Income taxes are what, 25-30% of total tax revenue in the UK? I know OECD average is 25%. It's about 42% in the US.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#136

Post by m0llusk »

jandrewrogers wrote: post #21
keehun wrote: post #12

Are all the dollar amounts in the simulated tax output at the top of the page inflation adjusted? For example, I inputted married, with no dependents with $500,000 salary and in 1977, the federal amount was $299,864 and in 2020 was $133,947. I assume these amounts can be compared without further adjusting for inflation? Tangentially, did federal taxes really come down that much?

In the 1970s there were massive tax deductions that don't exist today, so the actual tax incidence was much lower than what is implied by the marginal tax rates. There was a major overhaul of the tax code in the 1980s that simultaneously eliminated many of the tax deductions and offset that loss of deductions with lower the marginal tax rates. The change was approximately revenue neutral but made the tax code simpler…

That was a complex situation. At that time the IRS did a lot of investigation and you had to be very rich and clever to really make tax cuts work. My father worked as an airline pilot in the 1970s and paid a 75% rate which made him irrational about taxes. What was most often done was not relying heavily on tax exemptions but rather on compensation packages where employees could have a company car and a company condo and make use of the company country club membership and so on.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#137

Post by PopAlongKid »

HWR_14 wrote: post #81
PopAlongKid wrote: post #40

Earlier quoted context omitted.

No one "got rid" of AMT, it is still alive and well in both the federal tax code and some states, such as California. In fact, it is more popular than ever: the temporary TCJA tax changes (2018-2025) for individuals mostly consisted of moving features of AMT into the regular tax regime. No personal exemptions, large standard deduction, no mortgage interest deduction for equity debt, limited state and local tax (SALT)…

> no mortgage interest deduction for equity debt Wait, what? When did that happen? And did the "for equity debt" mean that it still applies to houses?

To clarify, these are technical terms for income tax purposes, and are not defined by any label a bank may put on a loan, such as "HELOC" (home equity line of credit).

Since 1987, whenever you originate or re-finance any mortgage, the portion of the proceeds used to buy, build, or improve your personal residence is called "acquisition debt" (used to acquire the asset), and the remaining portion is called "equity debt" since it is secured solely by the pre-existing equity in the property and is used for anything other than acquisition.

When you re-finance acquisition debt, it remains acqusition debt, but any cash-out from the re-finance not used to buy/build/improve is equity debt. As you pay down principal on the loan, you are considered to first pay off the equity debt, before acquisition debt.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#138

Post by m0llusk »

ChrisLomont wrote: post #116
femiagbabiaka wrote: post #56

Earlier quoted context omitted.

It’s not useless, it’s just data which needs context. Like the claim which GP makes that the Reagan tax reform was “revenue neutral” which is dubious at best.

It's easy enough to look up federal tax revenues during that period and see they were indeed revenue neutral. There's nothing dubious about it - it's trivial to check.

You are talking about revenue neutral at a population level. What matters to individuals is their own revenue. The impact of these changes on individuals varied a great deal. Many middle class lost valuable deductions while wealthy people saw their rate drop dramatically. There is absolutely nothing remotely neutral about any of that. So the only context where neutrality can be asserted is the same one where the statistician drowns in a lake that is an average of less than three feet deep.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#139

Post by PopAlongKid »

ameister14 wrote: post #134
hammock wrote: post #59

Earlier quoted context omitted.

What were the biggest deductions that don’t exist today?

So there were a few. One of the biggest was that there was an investment tax credit of 7% in the 60's and 10% in the 70's, which I believe was uncapped. I think those were also able to be rolled over to cover multiple years. That means that if you invested enough, you could pay essentially no taxes. This was repealed in 1986. [edit] Another that I should probably mention is the treatment of asset depreciation; in the…

>[edit] Another that I should probably mention is the treatment of asset depreciation; in the 1960's and 70's the government was incredibly generous with regards to asset depreciation.

That is pretty much how it is today as well. 100% bonus depreciation, Sec. 179, and the safe harbor for writing off pretty much any item under $2,500 as an expense, are all in place currently, and the favorable treatment of subsequent gain from sale is still there too.

Re: Show HN: Calculator for US individual income tax, from 1970-present

#140

Post by m0llusk »

divbzero wrote: post #29
KerrAvon wrote: post #19

I wish this would get written up in mainstream media. Hypothesis being that if more people knew this existed, it would put additional pressure on Congress to simplify tax filing.

The number of possible inputs for Income is stunning: 15 types of income in total. There are “only” 5 possible inputs under Deductions & Credits but 3 of them are categories with several subitems: Itemized Deductions • Home mortgage interest • Deductible medical expenses • Motor Vehicle registration fees • Charitable contributions • Casulty or Theft losses Other Itemized Deductions • Other state and local taxes • Ded…

Potentially interesting to note that the home mortgage interest and state tax deductions were long controversial as perverse incentives and got dropped during the Trump administration.
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