Perspective Check – American Tax History

Good evening, everyone,

As election season approaches, taxes are a hot topic. Some vow to raise them, saying this will allow us to better our social programs for a more prosperous future; others vow to lower them, saying this will encourage private investment in the economy.

But there seems to be a rather baffling degree of mis-information out there about what our tax rates have historically been. Some called Obama’s repeal of the Bush tax cuts, raising taxes on the wealthy from 35% back to 39.6%, “socialism” – apparently not realizing that our nation’s highest historical tax rate on the rich was 92%.

So I did a little digging; I managed to find here a PDF listing every tax bracket and its corresponding income tax rate from 1913 through 2013. All values are in inflation-adjusted 2013 – showing not what was on the books at the time, but what those amounts of money would work out to in today’s money after accounting for inflation.

In the interest of investigating taxes on the wealthy and their impact on our national prosperity, here are the top three tax brackets, along with their corresponding tax rates, every year ending in a “3” from 1913-2013:

  • 1913
    • A household with over $11,600,000 in annual income paid 7% in taxes.
    • A household with $5,800,000 in annual income paid 6% in taxes.
    • A household with $2,320,000 in annual income paid 5% in taxes.
  • 1923
    • A household making over $2,670,000 annually paid 58% in taxes.
    • A household making $2,014,000 annually paid 57% in taxes.
    • A household making $1,340,000 annually paid 56% in taxes.
  • 1933
    • A household making over $17,700,000 paid 63% in taxes.
    • A household making $13,200,000 paid 62% in taxes.
    • A household making $8,830,000 paid 61% in taxes.
  • 1943
    • A household making over $2,650,000 paid 88% in taxes.
    • A household making $1,990,000 paid 87% in taxes.
    • A household making $1,330,000 paid 85% in taxes.
  • 1953
    • A household making over $1,720,000 paid 92% in taxes.
    • A household making $1,290,000 paid 91% in taxes.
    • A household making $860,000 paid 90% in taxes.
  • 1963
    • A household making over $3,000,000 paid 91% in taxes.
    • A household making $2,250,000 paid 90% in taxes.
    • A household making $1,500,000 paid 89% in taxes.
  • 1973
    • A household making over 1,030,000 paid 70% in taxes.
    • A household making $931,000 paid 69% in taxes.
    • A household making $827,000 paid 68% in taxes.
  • 1983
    • A household making over $252,000 paid 50% in taxes.
    • A household making $197,000 paid 48% in taxes.
    • A household making $138,000 paid 44% in taxes.
  • 1993
    • A household making over $397,000 paid 39.6% in taxes.
    • A household making $222,000 paid 36% in taxes.
    • A household making $142,000 paid 31% in taxes.
  • 2003
    • A household making over $389,000 paid 35% in taxes.
    • A household making $218,000 paid 33% in taxes.
    • A household making $143,000 paid 28% in taxes.
  • 2013
    • A household making over $440,000 paid 39.6% in taxes.
    • A household making over $390,000 paid 35% in taxes.
    • A household making over $219,000 paid 33% in taxes.

Notice any trends? I noticed a few:

  • Prior to the 1980s, households making $1 million or more annually were taxed significantly more than households making only hundreds of thousands annually.
  • From the 1920s through the early 1980s, these wealthiest brackets were paying over 50% of their income in taxes.
  • Since 1983 not only have taxes on the rich dropped to levels not seen since the 1920s, but all tax brackets above $440,000 per year have vanished. We no longer differentiate between those making $440,000 and someone making 10 times that amount.

What are your thoughts on these historic tax rates, and how they correlate to our national well-being?

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This entry was posted in democrat, economics, Election Politics, libertarian, politics, republican, socialist, tax reform, taxes. Bookmark the permalink.

2 Responses to Perspective Check – American Tax History

  1. Pete Courcy says:

    For “perspective”, you might want to check effective rates, as opposed to marginal tax rates.

    That particular error completely torpedoes your entire argument.

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