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Posted: 10/27/2013 4:04:37 PM EST
With all of the complaining about taxes lately (myself included), I decided to look at the historical data on tax rates.

What I learned:

We are actually in a low point in tax rates for the last 100 years. Bottomed out in the early 90's and stayed low. How in the hell is this possible? I feel like I'm already taxed to death at our (comparably) low rate.

Around the World Wars/Great Depression, tax rates spiked severely, up to 94% for the wealthiest Americans (over 2.2 million per year, adjusted for inflation), and stayed over the 90% range (mostly), until 1964.

The 70s and 80s were high around 70% and 50% respectively) then the 90's they hit 28% for the wealthiest of us.

Since, we've slowly been making our way up again, at 39.6% currently for the top dogs.

Tax Rates 2013-Late 1800's, Inflation Adjusted

What other factors have changed, and why does it seem so much worse now? Are 90% tax rates on the way again?

While I feel better about our taxes now than I did, I'm more afraid of what taxes could possibly become again in the future.
Link Posted: 10/27/2013 4:06:47 PM EST
At one time all interest was deductible, like credit card interest. Under Reagan a lot of the stupid deductions (aka loopholes lol) were eliminated and the tax rates adjusted.

How mortgage interest is still deductible, IDK.
Link Posted: 10/27/2013 4:11:25 PM EST
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Originally Posted By 98_1LE:
At one time all interest was deductible, like credit card interest. Under Reagan a lot of the stupid deductions (aka loopholes lol) were eliminated and the tax rates adjusted.

How mortgage interest is still deductible, IDK.
View Quote


Interesting.
Link Posted: 10/27/2013 4:14:39 PM EST
I've read those stats about 94% tax brackets, and just don't understand how anyone went for it (Assuming anyone ever actually paid that much). As obscene as slavery is, at least you got a crappy roof over your head, food, and clothing for your labor. Working and only being allowed to keep 6 cents of every dollar you earn seems evil to me.
Link Posted: 10/27/2013 4:15:00 PM EST
Originally Posted By TheReluctantOhioan:
With all of the complaining about taxes lately (myself included), I decided to look at the historical data on tax rates.

What I learned:

We are actually in a low point in tax rates for the last 100 years. Bottomed out in the early 90's and stayed low. How in the hell is this possible? I feel like I'm already taxed to death at our (comparably) low rate.

Around the World Wars/Great Depression, tax rates spiked severely, up to 94% for the wealthiest Americans (over 2.2 million per year, adjusted for inflation), and stayed over the 90% range (mostly), until 1964.

The 70s and 80s were high around 70% and 50% respectively) then the 90's they hit 28% for the wealthiest of us.

Since, we've slowly been making our way up again, at 39.6% currently for the top dogs.

Tax Rates 2013-Late 1800's, Inflation Adjusted

What other factors have changed, and why does it seem so much worse now? Are 90% tax rates on the way again?

While I feel better about our taxes now than I did, I'm more afraid of what taxes could possibly become again in the future.
View Quote


Late 1800s? 1913 was the start.. And the top bracket was 7%..

Besides, that, we weren't nicked and dimed to death on everything under the sun.
Link Posted: 10/27/2013 4:17:21 PM EST
Not really a low point for the majority of the population though. Go back and look at the earliest brackets. In today's dollars you'd barely have any taxes taken out until you hit the $400,000 mark. Even up through the 1920's the lowest bracket of 4% was up in the $50,000 range.
Link Posted: 10/27/2013 4:18:04 PM EST
[Last Edit: 10/27/2013 4:32:08 PM EST by Chairborne]
My guess is a lot more than half of working Americans were paying income tax back in the "bad old days". We also didn't run a $1T annual deficit.

Notice that in 1944 the minimum tax rate was 23%, if you made one dollar. 46% of households were not paying nothing.
Link Posted: 10/27/2013 4:19:08 PM EST


Needs moar pitchers.

Link Posted: 10/27/2013 4:22:58 PM EST
Never really cared to analyze that 90%+ number....you think anyone kept only $10 of every $100?
There is no way that holds water.....no one would claim they made anything....which of course, to most extents, there was no way to audit anything anyone claimed back in those days.
Link Posted: 10/27/2013 4:29:49 PM EST
Tax brackets, how do they work?
Link Posted: 10/27/2013 4:42:48 PM EST
Originally Posted By TheReluctantOhioan:
With all of the complaining about taxes lately (myself included), I decided to look at the historical data on tax rates.

What I learned:

We are actually in a low point in tax rates for the last 100 years. Bottomed out in the early 90's and stayed low. How in the hell is this possible? I feel like I'm already taxed to death at our (comparably) low rate.

Around the World Wars/Great Depression, tax rates spiked severely, up to 94% for the wealthiest Americans (over 2.2 million per year, adjusted for inflation), and stayed over the 90% range (mostly), until 1964.

The 70s and 80s were high around 70% and 50% respectively) then the 90's they hit 28% for the wealthiest of us.

Since, we've slowly been making our way up again, at 39.6% currently for the top dogs.

Tax Rates 2013-Late 1800's, Inflation Adjusted

What other factors have changed, and why does it seem so much worse now? Are 90% tax rates on the way again?

While I feel better about our taxes now than I did, I'm more afraid of what taxes could possibly become again in the future.
View Quote



Sigh....this is an apples to oranges comparison because there are hundreds of ways a person is taxed today as opposed to very few at the beginning of those charts. Most states didn't even have income taxes a hundred years ago, for example.
Link Posted: 10/27/2013 4:44:00 PM EST
Remember at one time individual income was not taxed. That was a HUGE jump. And your list is only income taxes. Think of all the other taxes we pay now...Fed, State, Local, etc.
Link Posted: 10/27/2013 4:44:24 PM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Matt_Krush:
Never really cared to analyze that 90%+ number....you think anyone kept only $10 of every $100?
There is no way that holds water.....no one would claim they made anything....which of course, to most extents, there was no way to audit anything anyone claimed back in those days.
View Quote



That might have been why it was so high- they knew that people were hiding income so they figured they'd take everything they couldn't hide.

I can't believe how recently people were paying 70% of their income.

Link Posted: 10/27/2013 4:45:37 PM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Palandine:
I've read those stats about 94% tax brackets, and just don't understand how anyone went for it (Assuming anyone ever actually paid that much). As obscene as slavery is, at least you got a crappy roof over your head, food, and clothing for your labor. Working and only being allowed to keep 6 cents of every dollar you earn seems evil to me.
View Quote


It is a crazy tax rate but I dont think it ever applied to anyone "working" in the conventional sense.
Link Posted: 10/27/2013 4:47:24 PM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By SWODaddy:



Sigh....this is an apples to oranges comparison because there are hundreds of ways a person is taxed today as opposed to very few at the beginning of those charts. Most states didn't even have income taxes a hundred years ago, for example.
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Originally Posted By SWODaddy:
Originally Posted By TheReluctantOhioan:
With all of the complaining about taxes lately (myself included), I decided to look at the historical data on tax rates.

What I learned:

We are actually in a low point in tax rates for the last 100 years. Bottomed out in the early 90's and stayed low. How in the hell is this possible? I feel like I'm already taxed to death at our (comparably) low rate.

Around the World Wars/Great Depression, tax rates spiked severely, up to 94% for the wealthiest Americans (over 2.2 million per year, adjusted for inflation), and stayed over the 90% range (mostly), until 1964.

The 70s and 80s were high around 70% and 50% respectively) then the 90's they hit 28% for the wealthiest of us.

Since, we've slowly been making our way up again, at 39.6% currently for the top dogs.

Tax Rates 2013-Late 1800's, Inflation Adjusted

What other factors have changed, and why does it seem so much worse now? Are 90% tax rates on the way again?

While I feel better about our taxes now than I did, I'm more afraid of what taxes could possibly become again in the future.



Sigh....this is an apples to oranges comparison because there are hundreds of ways a person is taxed today as opposed to very few at the beginning of those charts. Most states didn't even have income taxes a hundred years ago, for example.


.not to mention the hidden cost of every business endeavour due to the overlapping web of bureaucracy and regulation every activity is subject to.
Link Posted: 10/27/2013 4:52:00 PM EST
The sad fact is, for millions (billions) of people, they wholeheartedly believe that for everyone to be "equal", everyone must be compensated for their time/life the same, no matter what they do, or don't do.

Until we enter a post-scarcity state, it is an illusion, a fantasy..

Link Posted: 10/27/2013 4:59:26 PM EST
So then, the general consensus is that while our tax rate may look good on paper compared to the past, "hidden taxes" and fees, plus a decreasing amount of things that qualify as tax deductions have made the actual amount of money to Uncle Sam worse?
Link Posted: 10/27/2013 5:00:36 PM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By 98_1LE:
At one time all interest was deductible, like credit card interest. Under Reagan a lot of the stupid deductions (aka loopholes lol) were eliminated and the tax rates adjusted.

How mortgage interest is still deductible, IDK.
View Quote


It wasn't just the interest deduction that was taken away under Reagan. Up until 1992, you could deduct work-related expenses (auto mileage, uniforms, work-related telephones, etc.) from your gross income even if you filed using the standard deduction. Beginning in 1993, you could take deductions for work-related expenses only if you filed using itemized deductions. This hit many military reservists pretty hard, expecially those in the lower ranks and those who had no other deductions they could itemize.
Although the tax rate stayed the same, the actual amount of tax paid by those who were hit by the new rule went up.
Link Posted: 10/27/2013 5:04:03 PM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By TheReluctantOhioan:
So then, the general consensus is that while our tax rate may look good on paper compared to the past, "hidden taxes" and fees, plus a decreasing amount of things that qualify as tax deductions have made the actual amount of money to Uncle Sam worse?
View Quote


You are also not seeing the tax rates for corporations, licensing fees, expenses to meet regulations, auditing to meet government requirements, hiring expenses, legacy expenses..

There are literally millions of laws and interpreted rules that carry some kind of burden fiscally that goes to the government.

Now.. the real issue with taxation, and this usually blows people's minds is; ALL money goes to the government in the end. The tax rate is simply how fast the cycle of money changing hands where the government gets a cut, takes to complete.
Link Posted: 10/27/2013 5:07:54 PM EST
Not everyone used to be taxed.
First income taxes started back in the civil war and income taxes that we know of today started due to prohibition.
Link Posted: 10/27/2013 5:09:54 PM EST
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Originally Posted By WinMod94:
Not everyone used to be taxed.
First income taxes started back in the civil war and income taxes that we know of today started due to prohibition.
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Some days, I think I was born 200 years too late.
Link Posted: 10/27/2013 5:10:27 PM EST
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Originally Posted By sq40:


You are also not seeing the tax rates for corporations, licensing fees, expenses to meet regulations, auditing to meet government requirements, hiring expenses, legacy expenses..

There are literally millions of laws and interpreted rules that carry some kind of burden fiscally that goes to the government.

Now.. the real issue with taxation, and this usually blows people's minds is; ALL money goes to the government in the end. The tax rate is simply how fast the cycle of money changing hands where the government gets a cut, takes to complete.
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Originally Posted By sq40:
Originally Posted By TheReluctantOhioan:
So then, the general consensus is that while our tax rate may look good on paper compared to the past, "hidden taxes" and fees, plus a decreasing amount of things that qualify as tax deductions have made the actual amount of money to Uncle Sam worse?


You are also not seeing the tax rates for corporations, licensing fees, expenses to meet regulations, auditing to meet government requirements, hiring expenses, legacy expenses..

There are literally millions of laws and interpreted rules that carry some kind of burden fiscally that goes to the government.

Now.. the real issue with taxation, and this usually blows people's minds is; ALL money goes to the government in the end. The tax rate is simply how fast the cycle of money changing hands where the government gets a cut, takes to complete.


Can you explain that in a little more detail?
Link Posted: 10/27/2013 5:11:35 PM EST
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Originally Posted By TheReluctantOhioan:


Can you explain that in a little more detail?
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Originally Posted By TheReluctantOhioan:
Originally Posted By sq40:
Originally Posted By TheReluctantOhioan:
So then, the general consensus is that while our tax rate may look good on paper compared to the past, "hidden taxes" and fees, plus a decreasing amount of things that qualify as tax deductions have made the actual amount of money to Uncle Sam worse?


You are also not seeing the tax rates for corporations, licensing fees, expenses to meet regulations, auditing to meet government requirements, hiring expenses, legacy expenses..

There are literally millions of laws and interpreted rules that carry some kind of burden fiscally that goes to the government.

Now.. the real issue with taxation, and this usually blows people's minds is; ALL money goes to the government in the end. The tax rate is simply how fast the cycle of money changing hands where the government gets a cut, takes to complete.


Can you explain that in a little more detail?


He probably means to say there would be no value to fiat money unless you could pay your taxes with it.
Link Posted: 10/27/2013 5:19:49 PM EST
Paying taxes to defend the country is one thing, paying taxes so the Democrats can buy votes with your money is quite another,
Link Posted: 10/27/2013 5:21:35 PM EST
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Originally Posted By Jimfnd:
Paying taxes to defend the country is one thing, paying taxes so the Democrats can buy votes with your money is quite another,
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I think most of that comes from donations
Link Posted: 10/27/2013 5:28:35 PM EST
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Originally Posted By Matt_Krush:
Never really cared to analyze that 90%+ number....you think anyone kept only $10 of every $100?
There is no way that holds water.....no one would claim they made anything....which of course, to most extents, there was no way to audit anything anyone claimed back in those days.
View Quote


90% was a marginal rate it was only applied to income in excess of the top bracket. Now how many people actually paid that rate after sheltering income and the like I have no idea.
Link Posted: 10/27/2013 5:33:39 PM EST
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Originally Posted By WinMod94:
Not everyone used to be taxed.
First income taxes started back in the civil war and income taxes that we know of today started due to prohibition.
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Originally Posted By WinMod94:
Not everyone used to be taxed.
First income taxes started back in the civil war and income taxes that we know of today started due to prohibition.





Prior to the creation in 1913 of the national income tax, about a third of Uncle Sam’s annual revenue came from liquor taxes. (The bulk of Uncle Sam’s revenues came from customs duties.) Not so after 1913. Especially after the income tax surprised politicians during World War I with its incredible ability to rake in tax revenue, the importance of liquor taxation fell precipitously.

By 1920, the income tax supplied two-thirds of Uncle Sam’s revenues and nine times more revenue than was then supplied by liquor taxes and customs duties combined. In research that I did with University of Michigan law professor Adam Pritchard, we found that bulging income-tax revenues made it possible for Congress finally to give in to the decades-old movement for alcohol prohibition.


http://archive.mises.org/6907/prohibition-and-the-income-tax/



Keep reading to find out why prohibition was finally repealed.



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