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We interrupt your regularly scheduled Friday Evening TGIF festivities....

In 2011 there were 6 tax brackets. 10%, 15%, 25%, 28%, 33%, 35%.

MARRIED FILING JOINTLY
2011 FEDERAL TAX BRACKETS
• Taxable Income:
Income Tax:
• $0 - $17,000
10% of the amount over $0
• $17,001 - $69,000
$1,700 plus 15% of the amount over $17,000
• $69,001 - $139,350
$9,500 plus 25% of the amount over $69,000
• $139,351 - $212,300
$27,087.50 plus 28% of the amount over $139,350
• $212,301 - $379,150
$47,513.50 plus 33% of the amount over $212,300
• $379,150 +
$102,574 plus 35% of the amount over $379,150

I just talked to my Mom, she's 78, a Depression baby, she told me my Grandfather had a good job in 1941 in the Quincy Mass Shipyards building cargo ships under the lend lease agreement with the UK.

He was paid 75 cents an hour. About 6 bucks a day or $1500 a year without overtime. My Grandpop probably fit into the bottom tax bracket of 10%, which was zero to $2k. Adjusted to inflation that 2k is about 30k today.

A house was $4000, a new car was $850, gas was 12 cents a gallon.

In 1941 there were 32 income tax brackets. 4 brackets for a million and over. 12 brackets for 100k and over.

Today we have 6 brackets that try to describe a progressive geometric curve, in 1941 there 32. Today effective income tax rates are nearly flat. In effect our income taxes are regressive.

We fell prey to the Reagan era, "level the playing field" and "Tax fairness". Its not whats fair, its what creates a stable economy. Infrastructure spending and New Deal Tax Policy that rewarded domestic investment (creating jobs) along with the Glass Steagal bank firewall gave the US a stable economy with short and shallow recessions. And job creation during a recovery from a recession.

By the end of the Reagan era New Deal tax policy was dismantled, the 3 following recessions (1990, 2000, 2008-2012) were deeper and longer. In 1999 Glass Steagal was partially repealed (can you say Mortgage crisis?). Nafta was signed, and the 2000 Commodities and Futures Modernization act codified the Credit Default Swap.

This History flashback was brought to you by Socialists, Liberuls and Democrats. We now return you to your regularly scheduled Friday Evening.

Originally posted to Income Inequality Kos on Fri Aug 31, 2012 at 02:27 PM PDT.

Also republished by Keynesian Kossacks, The Royal Manticoran Rangers, and ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    jamess, NormAl1792, qua, MKHector

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Fri Aug 31, 2012 at 02:27:47 PM PDT

  •  wrong (0+ / 0-)
    effective income tax rates are nearly flat. In effect our income taxes are regressive
    •  I just love this crap (0+ / 0-)

      You walk into a group diary and shit on our floor without a single citation......

      Precious.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Fri Aug 31, 2012 at 02:58:57 PM PDT

      [ Parent ]

      •  you want to throw down (1+ / 0-)
        Recommended by:
        Roger Fox

        http://www.taxpolicycenter.org/...

        effective individual tax rate 2007

        lowest quintile  -6.8 percent
        second quintile  -0.4 percent
        middle                  3.3 percent
        fourth                    6.2 percent
        highest quintile     14.4 percent
        top 10 percent       16.2
        top 5 percent'          17
        1 [percent                 19

        --- the tax policy center is the undisputed source when it comes to tax data, and the obama administration has used them before

        can i have a tip please, because sucker you've just been served

    •  Gotta citation yet? (1+ / 0-)
      Recommended by:
      freedomalliance

      effective income tax rates:

      Top 10% pay 16.2%
      Top 5% pay 17.6%
      Top 1% pays 19%

      Might that appear to be nearly flat?

      Of course if we expand our purview to all Federal taxes, its like 27%, 28%, 29%.

      Yeah flatish.......

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Fri Aug 31, 2012 at 03:13:55 PM PDT

      [ Parent ]

      •  here is something i want to ask you (0+ / 0-)

        let's see if you can get the right answer

        1. In 1979, the top tax rate was about 70 percent under Carter.

        In 1996, it was only 39.6 percent

        However in 1979, the top  1 percent paid about 22 percent of their income in taxes, but in 1996, they paid 23.8, slightly higher, but let's just say the same.

        How is that possible?

        2. Is it better to get the same amount of revenue with higher or lower marginal tax rates?

        •  these questions may be too (0+ / 0-)

          mentally taxing, i apologize

        •  Higher (0+ / 0-)

          And include deductions and exemptions for domestic investment in the US economy, in essence keeping the effective rates the same or nearly the same.

          I actually dont care much about the revenue, deficit spending on infrastructure is the best way to stimulate the economy.

          You say: How is that possible? Elimination of many deductions and exemptions. In 1980 the top bracket got about a 68% tax break. 70 times 32% is 22.4.

          In 2007 it was about 30%. 35 times 60% is 21.

          That suggests from 1980 to 2007 more than half of deductions and exemptions were removed based on dollar value. We are in a period of historically low deductions.

          Its better to have a stable economy. And that requires policy that creates jobs, thru infrastructure spending and tax breaks.

          FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Sat Sep 01, 2012 at 10:44:58 AM PDT

          [ Parent ]

          •  Ok, so let me get this straight (0+ / 0-)

            You said you don't really "care much about revenue", which is supposedly the basis of why we have a tax code

            So at least you understand that even though marginal tax rates went down it went down in tandem with many deductions and exemptions dissapearing.

            But you think that ceteris paribus, it's better to bring in the same amount of revenue with higher tax rates as opposed to lower tax rates.
            Then sorry, this conversation is over. Paul Krugman just gagged.

            It's well accepted among all economists that higher marginal tax rates reduce incentives to work and invest.

            Krugman:

            S

            o where’s the problem? Well, to pay interest on that debt, the government will have to raise a lot more revenue. Again, this is a wash — the extra revenue is matched by the extra income people receive as bondholders. But tax rates will have to go way up; and because lump-sum taxes don’t exist in the real world, this means that marginal tax rates will have to go way up.

            And you don’t have to be a right-winger to acknowledge that yes, very high marginal tax rates act as a disincentive to productive activity. So real GDP may well fall significantly.

            http://krugman.blogs.nytimes.com/...
            •  Krugman is refering to raising taxes to pay debt (0+ / 0-)

              and or interest. That is not what I have advocated. One of the Romers recently published a paper saying the same.

              The simple reason that its a "wash" is because there is no investment in the economy.

              Fiscal expansion can be done thru monetary policy or stimulus, if monetary policy wont/cant move, then many Keynesian types choose deficit spending to fund direct stimulus.

              And as long as we're in a liquidity trap I anticipate Krugman will continue to advocate stimulating the economy thru deficit spending.

              And include deductions and exemptions for domestic investment in the US economy, in essence keeping the effective rates the same or nearly the same.

              FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

              by Roger Fox on Sun Sep 02, 2012 at 12:25:04 PM PDT

              [ Parent ]

              •  Sorry (0+ / 0-)

                The general rule that higher marginal tax rates reduce incentives to produce, work, and investment regardless of why the marginal tax rates are high. He was just using this as an example.

                But again no one is advocating that deficit spending is not good  in a liquidity trap. Don't go into straw man territory.

                Effective tax rates don't matter on the margin, marginal tax rates, what you earn on the NEXT DOLLAR, is what matters.

                I asked you as a general rule, is it better to garner X amount of revenue with lower or higher marginal tax rates, and you said higher.

                Btw , excluding WWII , the current deficits as a share of GDP, are larger than the deficits we ran from 1933-1941 by a considerable margin. Between 1933-1941 , deficts were 4-6 percent of gdp Current deficits are about 9 percent of gdp, and have been in the 9-11 percent range for the last 3 1/2 years.

      •  you're talking about (1+ / 0-)
        Recommended by:
        Roger Fox

        between the top ten percent vs top 1 percent, i am talking about over the entire distribution of income, you're cherry picking

  •  Nothing less that 10 brackets and a 70% top rate (0+ / 0-)

    & tax breaks for emerging tech and markets like Solar Wind HVDC smart grid and Renewable storage systems if you make the stuff in the US, create jobs in the US.

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Fri Aug 31, 2012 at 02:51:15 PM PDT

    •  hmmm (0+ / 0-)

      so the government is going to decide what are emerging markets and emerging companies?

      And if there's nothing bad with a 70 percent why create carve outs for special industries?

      •  WE used to reward domestic investment (0+ / 0-)

        That environment changed with the 1986 Tax Reform Act.

        In the early days of radio we gave tax breaks to vacuum tube manufacturers. During WW2 we wanted United Aircraft to expand production

        the government paid partially or fully for the expansions in the form of tax breaks and accelerated depreciation

        (Fernandez, Ronald (1983), Excess profits: the rise of United Technologies)

        In 1954 excise taxes on telephones were reduced

        http://www.taxpolicycenter.org/...

        Jan 15th, 1938
        New Tax Plan To Aid Trade Is Proposed

        On Cap Gains....

        encouraging investment of capital in new productive enterprises

        more liberal deductions  in order to minimize the risk of investment in new enterprises

        http://news.google.com/...

        Depression era labor leader Sidney Hillman (ACW) called it a part of Industrial Policy. And for 50 years it was normal to throw a bone to companies in emerging areas.

        Carters Energy Tax Act of 1978 gave tax credits to spur solar, wind and geo thermal. By 1980 US solar manufacturers had the largest share of the world market.
        http://en.wikipedia.org/...

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Sat Sep 01, 2012 at 10:10:17 AM PDT

        [ Parent ]

  •  1941 Marginal Rates Single Taxpayer: (0+ / 0-)

    approximately*
    33%  $   183,000 adjusted to 2011 dollars
    51%  $   397,000 adjusted
    67%  $ 1,221,000 adjusted
    88%  $76,320,000 adjusted

    1963 Marginal Rates (last year top was 91%):

    34%  $   112,700 adjusted to 2010 dollars
    50%  $   225,400 adjusted
    65%  $   450,700 adjusted
    75%  $   704,300 adjusted
    91%  $2,817,000 adjusted

    *the chart shows adjusted dollars for 1941 but looks to me to show 1963 dollars on that part of the chart. I can't believe the 30% rate was levied on $12,000 in 2010 dollars ($1,700 annual income in 1963).

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Fri Aug 31, 2012 at 03:59:31 PM PDT

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