US Historical Income Tax Rates
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US Historical Income Tax Rates
1–10 of 98 posts
Re: US Historical Income Tax Rates
#2Interesting. 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.
Re: US Historical Income Tax Rates
#3Graph: Historical Marginal Tax Rate for Highest and Lowest Income Earners
https://commons.wikimedia.org/wiki/File:Historical_Marginal_...
Re: US Historical Income Tax Rates
#4I 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.
Re: US Historical Income Tax Rates
#5Interesting. 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.
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.
Re: US Historical Income Tax Rates
#6I 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.
> 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.
Re: US Historical Income Tax Rates
#7I 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.
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.
Re: US Historical Income Tax Rates
#8I 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.
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.
Re: US Historical Income Tax Rates
#9Interesting. 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.
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.
This is false in the US. Neither loans nor gifts of $1200 are taxed.
Also, loans don't evade the capital gains tax, they merely delay it. Stepped-up basis is what evades the capital gains tax.
Re: US Historical Income Tax Rates
#10Interesting. 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.
Looking at 1961, where we have 20% and 91% marginal tax rates, this comes out to be ~19k and 1.9mil, adjusted for inflation (2k and 200k nominally).
Compare these days, where we have 12% min and 37% max for 10k and 500k respectively.
If we were to tax at 37% using 1961 threshholds, you'd have to be making 95k inflation adjusted (that's the 38% threshhold), or 10k nominally.
Something else I found fascinating was that we had over 25 brackets back in the day. I can only imagine the headache that would be without an Excel spreadsheet.
People (myself included) might complain about taxes now, I can only imagine in the 60s.
Thanks for the insights, OP.