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.
US Historical Income Tax Rates
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Re: US Historical Income Tax Rates
#12In 1944 the Federal income tax rate was as high as 94% for those making more than $200,000.
Re: US Historical Income Tax Rates
#13In 1944 the Federal income tax rate was as high as 94% for those making more than $200,000.
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.
Re: US Historical Income Tax Rates
#14Interesting. 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.
The 1% aren't borrowing against stock - or if they are - it's minimal and not worth discussion.
99% of the borrowing is coming from people worth close to a billion or more (0.001%).
Re: US Historical Income Tax Rates
#15I 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.
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).
Re: US Historical Income Tax Rates
#16I'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!
Re: US Historical Income Tax Rates
#17Earlier quoted context omitted.
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.
Yes, when your friend says it's a loan and you treat it appropiately on your tax return it's not taxed. Else it will be. And if you can delay capital gains tax, great for you! How do I delay income tax?
Re: US Historical Income Tax Rates
#18I 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 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.
Re: US Historical Income Tax Rates
#19I 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 soc…
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Re: US Historical Income Tax Rates
#20A 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%.