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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

#141

Post by HWR_14 »

PopAlongKid wrote: post #137
HWR_14 wrote: post #81

Earlier quoted context omitted.

> 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…

Thanks.

That is a very clear explanation. It seems like that got caught up in the whole "no interest other than acquisition debt is deductible" rule change.

Also, I know you were enumerating items, not advocating for their return. I see the change as good, and didn't know if there is a countervailing point of view explaining why interest on equity debt should be deductible (possibly from the entity that educated you on the matter).

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

#142

Post by HWR_14 »

throwaway0a5e wrote: post #130
JackFr wrote: post #126

Earlier quoted context omitted.

> asinine ideological Sometimes called “principled”

It may be derived from principal but that does not change the fact that pretty much any take that's out there on either extreme (in this case "taxation is theft" on one side and "taxes are inherently good" on the other) is going to be regarded as asinine by the bulk of the population. Do you disagree?

No. I'm willing to stand that the majority of the population will agree that outright lying about numbers on your tax forms to "lower your bill" is wrong.

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

#143

Post by HWR_14 »

throwaway0a5e wrote: post #123
HWR_14 wrote: post #79

Earlier quoted context omitted.

The second one isn't a deduction, it was inadequate fraud and tax evasion detection. It's like saying that the tax rates didn't matter back then because you were a child and therefore paid no tax.

Regardless, in aggregate it means the effective rate was lower. If the subway costs $1 and 50% of the jump the turn-style 50% of the time the cost to ride the subway in aggregate is $0.75 Sure, if you take some asinine ideological hard line about the goodness or badness of taxation you'll probably get your panties in a knot but if you look at it from the perspective of who's spending money in the economy a little bit…

> If the subway costs $1 and 50% of the jump the turn-style 50% of the time the cost to ride the subway in aggregate is $0.75

No, you have jumpers whose aggregate cost is $0.50 and non-jumpers whose aggregate cost is $1.00. The revenues realized are $0.75 a ride, but the costs aren't distributed evenly. If the jumpers were caught, then the cost could decline to $0.75, the nonjumpers would pay less and the jumpers would pay more. That world is better for the half of the population that doesn't jump.

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

#144

Post by ChrisLomont »

m0llusk wrote: post #138
ChrisLomont wrote: post #116

Earlier quoted context omitted.

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 stat…

>You are talking about revenue neutral at a population level.

Yes, that is the econometric definition of revenue neutral tax changes. Of course most any change in tax structures will affect individuals, but that is nearly irrelevant (unless you never want a change to tax law).

> while wealthy people saw their rate drop dramatically

Have you looked up this claim with actual historical effective tax rate numbers? It's simply not true.

Here's [1] CBO total effective tax rates across many income level, from 1979 to 2005. Look at Table 1, then Total Effective Rate (which is what each group actually paid). Take, for example, Reagan tax cut of 1986, and pick a window around it, saw 1984 to 1987. Top 0.01 effective rate increased from 31.8 to 33.9. Lowest quintile rate decreased from 10.2 to 8.7.

In fact, for the 1986 cut, the lowest 4 quintiles saw a slight tax decrease, the top quintile saw a tax increase.

Next, look through the individual income tax rates - again, the same. After the Reagan tax cut in 1986, the top 0.01% saw an increase in effective rates - higher than any from 1979 (start of the dataset) through 87.

Here too you see the bottom 80% ending up with lower tax rates across the board.

I don't know where you got the idea rates dropped dramatically. It's not in this data.

[1] https://www.cbo.gov/sites/default/files/110th-congress-2007-...

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

#145

Post by ChrisLomont »

galangalalgol wrote: post #129
tick_tock_tick wrote: post #124

Earlier quoted context omitted.

I mean since we are talking Federal income tax the bottom 50% basically doesn't pay that.

Since the distribution is exponential, removing the top tax bracket and raising the rest a little would be revenue neutral, but exacerbate wealth inequality. Not arguing if thats fair or not, just that you can make policies revenue neutral while still favoring the ultra wealthy.

Except the Reagan cuts lowered taxes on the bottom 80%, and the top saw a small increase. See my other post with historical effective tax rates from the CBO.

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

#146

Post by ameister14 »

PopAlongKid wrote: post #139
ameister14 wrote: post #134

Earlier quoted context omitted.

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…

I think 62-21's creation of broad industry classifications expanded rates of depreciation for a wide variety of assets, though; I'm pretty sure that was re-structured in the 80's, not sure if it was part of the 1986 Tax regulations but likely around that time.

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

#147

Post by closeparen »

galangalalgol wrote: post #129
tick_tock_tick wrote: post #124

Earlier quoted context omitted.

I mean since we are talking Federal income tax the bottom 50% basically doesn't pay that.

Since the distribution is exponential, removing the top tax bracket and raising the rest a little would be revenue neutral, but exacerbate wealth inequality. Not arguing if thats fair or not, just that you can make policies revenue neutral while still favoring the ultra wealthy.

It would exacerbate income inequality. It would favor higher-wage workers.

Income and income taxes are irrelevant to the wealthy. Changes in wealth inequality are mostly changes in asset prices.

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

#148

Post by hnburnsy »

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.

Might be missing out on EITC where the federal government would pay him (negative tax rate)

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

#149

Post by petercooper »

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...

The other thing that's interesting is if you ignore private payments to healthcare entirely, the US still spends more per capita from the public purse on healthcare than the UK does. So the US pays a ton of public money and yet most of the population still gets nothing unless they pay even more.
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