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| Tax Rates in History | |
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| Tweet Topic Started: Apr 17 2011, 01:30 PM (986 Views) | |
| George K | Apr 17 2011, 01:30 PM Post #1 |
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Finally
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One of the things that I frequently hear is how tax rates are remarkably low today, compared to what they were back in the days of Eisenhower, Nixon and even earlier. While those statements are true, on the surface, they ignore a very important thing: at what income those rates kicked in. So, I went and looked at historical tax rates and found not only the rates, but the income at which those rates kicked in. Then, I took those rates, and ran them through an inflation calculator. The results were, shall we say, revelatory. For example, in 1916, the top rate was only 15% - on an income level of $2,000,000. That $2 million, in today's dollars is $39 million. The rates during WWII ran in the 80% range, but they didn't kick in until you earned more than $5 million (or $79 million 2010 dollars) In 1951, the top tax rate of 91% didn't kick in until income was $400,000 - inflation adjusted that's $3.5 million in todays dollars. Here's the chart:
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A guide to GKSR: Click "Now look here, you Baltic gas passer... " - Mik, 6/14/08 Nothing is as effective as homeopathy. I'd rather listen to an hour of Abba than an hour of The Beatles. - Klaus, 4/29/18 | |
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| John D'Oh | Apr 17 2011, 01:36 PM Post #2 |
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MAMIL
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So the rich really are getting richer. |
| What do you mean "we", have you got a mouse in your pocket? | |
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| George K | Apr 17 2011, 01:39 PM Post #3 |
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Finally
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Well, in 1941, you had to earn $79 million before the government took 81% of it. In 1951, you had to earn $3.5, before the government took 91% of everything above 3.5. |
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A guide to GKSR: Click "Now look here, you Baltic gas passer... " - Mik, 6/14/08 Nothing is as effective as homeopathy. I'd rather listen to an hour of Abba than an hour of The Beatles. - Klaus, 4/29/18 | |
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| John D'Oh | Apr 17 2011, 01:48 PM Post #4 |
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MAMIL
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And apparently it completely stopped people from wanting to become multi-millionaires, since there was absolutely no economic growth in those periods? |
| What do you mean "we", have you got a mouse in your pocket? | |
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| George K | Apr 17 2011, 01:50 PM Post #5 |
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Finally
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Didn't say that at all. The point that I'm (unsuccessfully) trying to make is that when people talk about the higher rates in history in the context of today's rates (as Chris Matthews did today), the consideration that those rates didn't kick in until astronomical incomes is conveniently ignored. |
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A guide to GKSR: Click "Now look here, you Baltic gas passer... " - Mik, 6/14/08 Nothing is as effective as homeopathy. I'd rather listen to an hour of Abba than an hour of The Beatles. - Klaus, 4/29/18 | |
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| John D'Oh | Apr 17 2011, 01:52 PM Post #6 |
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MAMIL
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I understood where you were coming from. My point was that the genuinely massively rich (as opposed to Obama's pseudo-rich earning 250K) really have benefited enormously from modern tax codes. |
| What do you mean "we", have you got a mouse in your pocket? | |
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| George K | Apr 17 2011, 01:57 PM Post #7 |
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Finally
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Don't see your point. The "genuinely massive rich" were the beneficiaries of the tax code until about 1942. It's after that that the "pseudo-rich" started taking a hit. |
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A guide to GKSR: Click "Now look here, you Baltic gas passer... " - Mik, 6/14/08 Nothing is as effective as homeopathy. I'd rather listen to an hour of Abba than an hour of The Beatles. - Klaus, 4/29/18 | |
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| Steve Miller | Apr 17 2011, 03:46 PM Post #8 |
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Bull-Carp
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Not necessarily. The rates you are quoting are top marginal rates, with the emphasis on "marginal". |
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Wag more Bark less | |
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| Axtremus | Apr 17 2011, 03:56 PM Post #9 |
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HOLY CARP!!!
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George, Given that historical context, would you now support raising the marginal rate for income over $250,000 ? (Compare that to the line in your chart for the year 1987.) |
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| jon-nyc | Apr 17 2011, 04:41 PM Post #10 |
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Cheers
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Really its the emphasis on 'top' that makes it somewhat misleading. Better yet, map the tax rates for particular levels of income (in constant dollars) over time. That will give us more insight as to whether there's anything to George's thesis. For example, map the equivalent of 500k (todays dollars) over time. What marginal ( and effective) tax rate did they pay? |
| In my defense, I was left unsupervised. | |
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| Klaus | Apr 17 2011, 11:55 PM Post #11 |
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HOLY CARP!!!
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Quite selfish of you to propose that we take your income as the example
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| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| Axtremus | Apr 18 2011, 07:56 AM Post #12 |
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HOLY CARP!!!
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This graph shows effective tax rates paid by people of different income levels over time:![]() Source: http://motherjones.com/politics/2011/04/taxes-richest-americans-charts-graph Note that all dollar figures have been inflation-adjusted to reflect 2010 dollars. |
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| big al | Apr 18 2011, 12:11 PM Post #13 |
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Bull-Carp
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I found this chart from that same site interesting as well...![]() It very well illustrates the fact that while income taxes are the burden of the wealthier taxpayer, the payroll taxes that come from wage earners has reached almost the same level that individual income taxes produce. Thus, the arguments about the little guys not paying their fair share ring pretty hollow. The impact of the combination of income and wage taxes is illustrated in this chart... ![]() Big Al |
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Location: Western PA "jesu, der simcha fun der man's farlangen." -bachophile | |
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| KlavierBauer | Apr 18 2011, 12:18 PM Post #14 |
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HOLY CARP!!!
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Well of course they are - we aren't taxing them enough yet. |
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"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper "He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple | |
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| KlavierBauer | Apr 18 2011, 12:28 PM Post #15 |
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HOLY CARP!!!
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Al: It doesn't necessarily demonstrate that does it? Couldn't this also be seen if more people were earning more money as employees, rather than as employers? It would still say that just over 40% of the federal governments income comes from income taxes - most of which are coming from payroll tax, less of which is coming from corporate tax - but not really demonstrate which incomes are paying the majority of that right? The income tax sensus of 2007 still shows that the top few % carry the majority of the income tax burden - I think this graph just shows that more of that is coming in from payroll, or am I reading it incorrectly? Interestingly, payroll tax is nearly inversely proportionate to corporate taxes. |
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"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper "He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple | |
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| JBryan | Apr 18 2011, 12:33 PM Post #16 |
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I am the grey one
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Payroll taxes fund exclusively programs that directly pay back the contributor, for the lowest earners usually more than they paid in. Corporate taxes are not paid by corporations. We pay them as a cost of doing business passed directly to the consumer. |
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"Any man who would make an X rated movie should be forced to take his daughter to see it". - John Wayne There is a line we cross when we go from "I will believe it when I see it" to "I will see it when I believe it". Henry II: I marvel at you after all these years. Still like a democratic drawbridge: going down for everybody. Eleanor: At my age there's not much traffic anymore. From The Lion in Winter. | |
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| KlavierBauer | Apr 18 2011, 12:38 PM Post #17 |
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HOLY CARP!!!
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Right - which is where I'm heading ultimately. I was looking for a possible correlation between decreasing corporate tax-rates and rising payroll tax income to the government, which might mean more money in people's pockets, and potentially higher incomes, which might equal higher payroll tax being collected. |
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"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper "He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple | |
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| Copper | Apr 18 2011, 01:12 PM Post #18 |
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Shortstop
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What would you do if you faced giving $810,000 of your next $1,000,000 to the feds? 1. Give it happily 2. Leave the country 3. Buy $800,000 worth of lawyers & accountants to try to save $10,000 4. Give it all to charity 5. Hire some congressman to fix it 6. other I think #5 has helped fix the problem over time. |
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The Confederate soldier was peculiar in that he was ever ready to fight, but never ready to submit to the routine duty and discipline of the camp or the march. The soldiers were determined to be soldiers after their own notions, and do their duty, for the love of it, as they thought best. Carlton McCarthy | |
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| John D'Oh | Apr 18 2011, 02:46 PM Post #19 |
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MAMIL
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I'd spend one third on booze, one third on women, and probably just waste the rest. |
| What do you mean "we", have you got a mouse in your pocket? | |
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| big al | Apr 19 2011, 06:26 AM Post #20 |
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Bull-Carp
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You are, in fact, reading that incorrectly. The point it makes is that considering the income tax burden without also considering the payroll tax burden unfairly, as I see it, characterizes the total tax burden on people of all incomes by excluding payroll taxes. The chart I posted tries to clarify that by calculating an effective tax on income accounting for both income and payroll (social security and Medicare) taxes. When taken together, the burden on the top 60 % of taxpayers varies by about 5% and the top 1% actually pay a lower percentage than the remainder of their cohort in the top 20%. Big Al |
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Location: Western PA "jesu, der simcha fun der man's farlangen." -bachophile | |
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| KlavierBauer | Apr 19 2011, 06:52 AM Post #21 |
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HOLY CARP!!!
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Payroll taxes are a sub-set of income tax though, aren't they? I read "payroll tax" or PAYE/PAYG tax as being FICA (social security/medicare), FUTA (unemployment), and income tax witholding. So the chart shows that nearly the same % of the government's income from "tax" comes from individual income tax, and payroll tax - right? It's hard to read, as the x/y axes aren't clearly labeled - but that's how I'm reading it. I guess I'm trying to figure out what then, is the difference between "Individual Income Tax" (as opposed to corporate tax), and "payroll tax," which is a subset of income tax? I'm also trying to figure out the relationship exactly, between the distinction of "payroll tax," and "corporate tax," which are clearly inversely related to one another. |
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"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper "He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple | |
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| big al | Apr 19 2011, 07:27 AM Post #22 |
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Bull-Carp
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You correctly read payroll taxes. However, those who argue that income taxes fall disproportionately on the the higher income taxpayers often do not count those in their arguments, choosing instead to focus only on the individual income (non-payroll) tax. The point I was trying to highlight is that the total tax burden is not, in my opinion, particularly disproportionate as a percentage of income when both individual income tax and payroll tax are included in the calculation. As JBryan points out, correctly I think, we all ultimately pay some portion of the corporate income tax. Some comes in the form of higher prices for goods and services, some as reduced dividends and capital gains to shareholders. Parsing those numbers to try to attribute the share of corporate taxes ultimately paid by different cohorts of taxpayers is a monumental task, and one subject to a good bit of arbitrary judgment and estimation. Big Al |
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Location: Western PA "jesu, der simcha fun der man's farlangen." -bachophile | |
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| jon-nyc | Apr 19 2011, 08:17 AM Post #23 |
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Cheers
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I've made the point that Social Security is essentially paid for by the middle class, while Defense and discretionary spending is covered largely by the affluent. Medicare is harder to classify, both because the tax doesn't have a cap, and the fact that the 2.9% payroll tax doesn't cover the actual expense. |
| In my defense, I was left unsupervised. | |
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| KlavierBauer | Apr 19 2011, 08:21 AM Post #24 |
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HOLY CARP!!!
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Jon: Medicare is also trickier to figure, because it isn't a free service, and so the participants are also paying out of pocket each month for the service, beyond their payroll tax. |
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"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper "He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple | |
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| jon-nyc | Apr 19 2011, 08:21 AM Post #25 |
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Cheers
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Well, keep in mind that the medicare portion of the payroll tax has no cap, you can't tell from that graph how much of the payroll tax comes from 'little guys' vs. 'big guys'. Of course if it was restricted to SS tax (which has a low maximum) then one could easily say from looking at that graph that 'little guys' are paying about as much as 'big guys'. Given the lack of cap on Medicare, it would need some more analysis. |
| In my defense, I was left unsupervised. | |
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6:27 AM Jul 11