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Can we all get a copy of the historical income tax rates on the top earners from 1913 to date?

I went here: http://www.taxpolicycenter.org/...

I've checked a couple other sources and believe this to be accurate.

I've lost my link to the great one adjusted for inflation, maybe someone has that link.

Can we discuss the current tax situation and the possible solutions to it in light of our history with the income tax rates over a longer period than since 2000?

My limited thoughts below.

I was born in 1951. My Dad had some opportunities for school and home ownership through the GI Bill.

I went to a great public school from kindergarten through 12th grade. I was very well prepared for college. I went to a private school for one year, then returned to the State Land Grant school in my home town. I got a good undergraduate degree. I went to a private law school, but would have been well served at the State School as well.

I have driven on the interstate highway system my entire adult life, benefited from the hydroelectric projects and all of the investments in infrastructure funded by the federal government.

For some reason our country considered what was necessary and reasonable to meet the country's needs in around 1933 and increased the revenue through taxation from 25% to 63% on the top earners. I wasn't alive then, but I have very clear memories from stories from my parents and grandparents about how things were for the ordinary folks then.

In 1938 we raised the top rate to 79%

In 1940 to 81%.

In 1944 to 94%.

It remained in the 80s and 90s until 1964.

It was reduced to 77% and remained at or above 70% through 1981.

50% 82-86

Under 40% from 1986 to date.

Was our country in better shape to meet our internal and external needs from 1940 through 1980, or has it been in better shape from 1980 to date?

I believe that looking at the expiration of the Bush tax cuts is short sighted and unproductive.

I believe that we should be looking at rolling back the Reagan tax cuts and perhaps the Kennedy tax cuts.

At a minimum I believe our bottom line should be a 75% tax rate on all TAXABLE INCOME over 3 million dollars. We all pay a reasonable rate, 35-40% on incomes up to 3 million.

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Comment Preferences

  •  Democrats Vs Republicans on Investor Tax rates (2+ / 0-)
    Recommended by:
    Gooserock, Roger Fox

    Ironically, after FDR, every Democratic presidency lowered the tax rate on investors (the case of Pres Obama is not known yet and JFK proposed while  LBJ passed).  Every tax increase on investors during this time took place under Republican presidents.

    Today's Democrats don't want to be seen as tax cutters on investors, and Republicans don't want to be seen as the tax raisers.  So neither side brings up this unexpected fact.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sat Nov 10, 2012 at 10:59:41 AM PST

    •  Correct on LBJ (0+ / 0-)

      Lots on the right like to say JFK cut taxes. It was LBJ.

      http://en.wikipedia.org/...

      AS we can see job creation was already growing, but it 1964 and 1965 the rate of increase looks stable.

      Photobucket

      Looking at GDP by dollars there simply doesnt appear to be any change in the rate of GDP growth increase in '64-'65. Or 66 or 67....

      Photobucket

      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 Nov 10, 2012 at 05:08:30 PM PST

      [ Parent ]

      •  JFK made the argument and proposed the law (1+ / 0-)
        Recommended by:
        Roger Fox

        he was then assassinated, and LBJ signed after Congress passed.

        Credit generally goes to JFK, partly because he is thought of more fondly than LBJ.  BTW, the big social legislation of the 1960s was far more LBJ than JFK.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sat Nov 10, 2012 at 05:16:30 PM PST

        [ Parent ]

        •  Recession from April 60 to Feb 61 (1+ / 0-)
          Recommended by:
          nextstep

          John F. Kennedy brought up the issue of tax reduction in his 1963 State of the Union address. His initial plan called for a $13.5 billion tax cut through a reduction of the top income tax rate from 91% to 65%, reduction of the bottom rate from 20% to 14%, and a reduction in the corporate tax rate from 52% to 47%. The first attempt at passing the tax cuts was rejected by Congress in 1963

          LBJ only got votes for the tax cut because he promised to keep the budget under 100 billion. At least thats what the previous version of wiki said.

          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 Nov 10, 2012 at 05:47:30 PM PST

          [ Parent ]

  •  If you want to know what the top 1% paid in taxes (3+ / 0-)
    Recommended by:
    nextstep, Bob Love, VClib

    you are looking at the wrong data.  Marginal rates don't tell you how much any group is paying -- you have to consider things like the definition of AGI, the exemptions, the deductions, etc.  That all changed significantly, for example, with the Tax Reform Act of 1986, so comparing marginal rates before and after that is pretty meaningless in terms of what people paid in federal income taxes.

    Much better -- look at EFFECTIVE rates, which gives you an idea of what percentage people actually paid in federal income taxes.  The CBO began keeping that data in 1970, when the top marginal rate was 70%, and the top 1% paid LESS in federal income taxes then than they did in 1999, when the top marginal rate was 39.6%.  That indicates that if you raise taxes back to what they were in the Clinton era, the top 1% would be paying more than they did when the top marginal rate was 70%. To figure out what that is, and whether that effective rate would be higher today than it was, say, in 1999 - 2000, you'd have to take into account how deductions, exemptions, etc. for the top 1% have changed since 1999 - 2000.  

    For historical effective federal income tax rates, look at the SECOND chart here.  

    This is why when this country debates what taxes should be on any group, people need to stop focusing so much on top marginal rates, because that doesn't tell you much.  We should be focused more in EFFECTIVE tax rates to see if any group is paying less or more than they did at any particular time in history.  

    •  I'm looking for a simple answer (0+ / 0-)

      So the idea of eliminating all deductions on personal income over 3 million, and imposing a rate of 75% would net the government 75%?

      I get really tired of people talking about gross income for those of us in business. I'm in business. All my business deductions happen long before my taxable income is determined.

      If a guy generates 100 million in revenue, and his business expenses are 97 million, he is not in the group I'm looking at.

      I don't like a flat tax. I want a progressive tax that actually collects $ from the top.

      I know they don't like that. I don't care. I don't think most of the 99% care.

      •  The answer is (1+ / 0-)
        Recommended by:
        VClib
        So the idea of eliminating all deductions on personal income over 3 million, and imposing a rate of 75% would net the government 75%?
        It would mean an effective tax rate of 75% of only that income over $3 million.  It would not mean an effective tax rate of 75% for someone who makes $5 million, because to calculate that you'd have to factor in all of the rates, deductions, exemptions, etc. along the way.

        The federal income tax system, as it is, is FAR too complex for this and many other reasons.  That is why some support either a flat tax (which is more regressive) or some notion of a "progressive" flat tax, with a stair-step flat tax (10% on income up to X, 15% on income between x and y, 10% on income between y and z).

        But the fact is that the federal government uses the tax system to try to provide incentives, but those incentives always benefit some and hurt others.  The mortgage interest deduction, for example, benefits homeowners, is probably to the detriment of renters, and probably keeps home prices (during times of higher interest) artificially high.  

        And, of course, on top of all of that, you've got the AMT, which was earlier designed to make sure the rich pay an effective tax rate of a certain amount, but now hits some high earners but not others (contributing to the inequity of the system) and, if the Bush Tax Cuts expire, will mean an extra $4000 this spring
        when taxes are filed for a family of 4 with a household income of $75,000.  

        There are so many complexities to the tax code.  But at the very least, it's safe to say that looking at top marginal rates doesn't tell you very much in terms of what the top 1% actually paid in taxes.  In fact, if you gave much of the 1% a choice between going back the a top marginal rate of 70% as it existed in 1979 or a top marginal rate of 39.6% as it existed in 2000, they'd pick option 1 because they would pay LESS in federal income taxes.  

      •  And some of those in the top 2.5% (2+ / 0-)
        Recommended by:
        Roger Fox, VClib

        (household income above $250,000) are already paying an EFFECTIVE tax rate of somewhere between 26% and 28% due to the AMT.  Compare that to the chart of AVERAGE historical effective federal income tax rates.  Do you want to raise taxes on this group?  

        You could, of course, enact something like the Buffet Rule, which imposes an EFFECTIVE federal income tax rate of 30% on incomes over $1 million.  But that only nets the federal government some $3 to $4 billion a year, which is pretty much a rounding error in the annual federal budget.  

        •  Revenue shouldnt be the goal of a tax increase (0+ / 0-)

          Moving tax burden sure. In your example above, the Buffet rule:

          Take 3.5 billion of tax liability from working and middle families and put it on the top .33%, making it revenue neutral.

          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 Nov 10, 2012 at 04:07:08 PM PST

          [ Parent ]

      •  rob - tax rates before 1986 and those after (0+ / 0-)

        are apples and oranges and cannot be compared to one another. You need to better understand the Tax Reform Act of 1986 which completely transformed the IRS code for individuals.

        "let's talk about that"

        by VClib on Sat Nov 10, 2012 at 04:29:56 PM PST

        [ Parent ]

  •  Economy driven by more than tax rates (2+ / 0-)
    Recommended by:
    Gooserock, VClib

    The tax code provided many ways to avoid the very high tax rates of the past, that is why the average rates paid by top earners then are far far lower than the diary's referenced top rates.  The tax code is far more complex than a rate table.

    The world economy changed in more fundamental ways than US tax rates over the past 70 years.  Most of the US economic competitors had their industry destroyed during World War II, and they needed to buy US made goods for consumption and to rebuild.

    The tax rates were also more acceptable, as they were to pay for the very high debt from World War II, this is very different from today's high debt which is not expected to decline as a share of GDP.

    The US was once uniquely able to manufacture important products, but that is no longer true.  Today, there are very few products that only the US can economically make.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sat Nov 10, 2012 at 11:11:08 AM PST

    •  One of the Important Effects of >50% Marginal (1+ / 0-)
      Recommended by:
      Roger Fox

      rates is compensation compression at the top, preventing most of the nation's income and wealth going to the very rich. It's not the only tool to accomplish that, investment and estate income has to be compressed too, but it's important because its effects don't care how the economy is structured or what sectors people work in.

      Since we slashed those top marginal rates at the beginning of the 80's, every penny of adjusted growth in family wealth in the US has been confined (classwise) to the 1%. Even the 91st-99th percentiles were stagnant.

      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 Sat Nov 10, 2012 at 11:19:15 AM PST

      [ Parent ]

      •  I see low wages and unemployment as problems (1+ / 0-)
        Recommended by:
        VClib

        I don't see those with high incomes as being a problem.  In fact I would like to see the economy with many more people with high incomes.

        Since the 1980s far more women are earning higher incomes.  As these women tend to marry high income men, this has contributed to greater inequality in household incomes as high income households go from having one high earner to two.  I don't see this improvement in the lives of women as a problem.

        Let's focus on getting a more rapidly growing private sector economy with much greater employment and rising wages.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sat Nov 10, 2012 at 12:05:32 PM PST

        [ Parent ]

  •  A better statistic (1+ / 0-)
    Recommended by:
    Bob Love

    is historical rates adjusted for inflation.  

    http://taxfoundation.org/...

    Saying that the top rate in X year was Y% isn't helpful.  And even saying that the top rate in X year was Y% on income over $Z, without knowing how much money that is in current dollars.  If you look at 1938, for example, there certainly WAS a top rate of 79%...that's indisputable.  But it only kicked in on income over $79 million (in today's dollars).  

    •  IIRC -and affected only one person (1+ / 0-)
      Recommended by:
      misslegalbeagle

      J Rockefeller.

      And thats a good link, but the rates are not adjusted for inflation. ( I know thats not what you meant) The income levels of the brackets are, and it includes both adjusted & nominal, which is even better. And the number of brackets which again is even better.

      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 Nov 10, 2012 at 03:59:05 PM PST

      [ Parent ]

  •  Ridiculous to compare tax rates (3+ / 0-)
    Recommended by:
    nextstep, Roger Fox, VClib

    over the years without also looking at the underlying tax laws affecting taxable income.
      For example, the 1986 Tax Act implemented restrictions on Passive Activity Losses.  By limiting the amount of deductible losses, the effective tax rate of many individuals increased, regardless of the actual tax rate.

    My Karma just ran over your Dogma

    by FoundingFatherDAR on Sat Nov 10, 2012 at 12:21:34 PM PST

    •  Yes. the 86 TRA had a huge impact (0+ / 0-)

      In fact I've been looking for something  a bit more in depth than the wiki article to read up on the 86 TRA.

      Any suggestions?

      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 Nov 10, 2012 at 04:01:20 PM PST

      [ Parent ]

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