US Historical Income Tax Rates • Hacker News Board

Re: US Historical Income Tax Rates

#21

Post by tapland » Tue, Mar 29, 2022, 11:42 PM UTC

whiddershins wrote: post #8

donatj wrote: post #4

I 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.

Also avoiding the "they don't even pay taxes" talk about people with low incomes.

Re: US Historical Income Tax Rates

#22

Post by closeparen » Tue, Mar 29, 2022, 11:42 PM UTC

donatj wrote: post #4

I 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.

If you would consider $12,400 a value of "say $20k" this is already the case... and the tax rate on the remaining $7600 is 10%. Someone earning $20k qualifies for other benefits worth more than $760, so their total effective tax rate is already negative.

Re: US Historical Income Tax Rates

#23

Post by revnode » Tue, Mar 29, 2022, 11:43 PM UTC

insickness wrote: post #3

Graph: Historical Marginal Tax Rate for Highest and Lowest Income Earners https://commons.wikimedia.org/wiki/File:Historical_Marginal_...

No post body was provided.

Re: US Historical Income Tax Rates

#24

Post by oh_sigh » Tue, Mar 29, 2022, 11:43 PM UTC

donatj wrote: post #4

I 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.

That's what the standard deduction does.

For example, 57% of households did not pay any federal income tax in 2021: https://www.cnbc.com/2022/03/25/57percent-of-us-households-p...

That's not even from COVID, the percentages are fairly similar going back a number of years.

Re: US Historical Income Tax Rates

#25

Post by mymllnthaccount » Tue, Mar 29, 2022, 11:44 PM UTC

revnode wrote: post #23

insickness wrote: post #3

Graph: Historical Marginal Tax Rate for Highest and Lowest Income Earners https://commons.wikimedia.org/wiki/File:Historical_Marginal_...

Quoted post unavailable.

How is it deceptive when it clearly states that is what it is doing?

Re: US Historical Income Tax Rates

#26

Post by rootusrootus » Tue, Mar 29, 2022, 11:44 PM UTC

revnode wrote: post #23

insickness wrote: post #3

Graph: Historical Marginal Tax Rate for Highest and Lowest Income Earners https://commons.wikimedia.org/wiki/File:Historical_Marginal_...

Quoted post unavailable.

> Who cares about the extremes?

What fraction of taxpayers pay the minimum rate?

Re: US Historical Income Tax Rates

#27

Post by qeternity » Tue, Mar 29, 2022, 11:44 PM UTC

BurningFrog wrote: post #20

A 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%.

It's also arithmetically impossible to pay the highest bracket given that it's a marginal tax rate.

Re: US Historical Income Tax Rates

#28

Post by azinman2 » Tue, Mar 29, 2022, 11:44 PM UTC

revnode wrote: post #23

insickness wrote: post #3

Graph: Historical Marginal Tax Rate for Highest and Lowest Income Earners https://commons.wikimedia.org/wiki/File:Historical_Marginal_...

Quoted post unavailable.

It’s still interesting, and I bet many on HN hit that top bracket.

Re: US Historical Income Tax Rates

#29

Post by next_xibalba » Tue, Mar 29, 2022, 11:45 PM UTC

donatj wrote: post #4

I 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 already the case and has been for quite some time. The table depicted at the link is shows tax rates before deductions. Think of it as a "top line" or "nominal" tax rate. People making under $20k (and more) have an effective tax rate of $0 in the USA.

As Mitt Romney pointed out in 2012 [1]: "Forty-seven percent of Americans pay no income tax."

[1] https://www.politifact.com/factchecks/2012/sep/18/mitt-romne...

Re: US Historical Income Tax Rates

#30

Post by modeless » Tue, Mar 29, 2022, 11:46 PM UTC

HarryHirsch wrote: post #17

modeless wrote: post #9

Earlier quoted context omitted.

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?

Wrong. If it's not a loan then it's a gift and that's not taxed either for $1,200 as I mentioned. No need to even report it if it's under $16,000 per year.