Here’s another fantastic graphic at Visualizing Economics, this one on the top marginal tax rates in the U.S. over the last century, coming to you in advance of tax day that, this year, falls on Monday, April 18th rather than Friday, April 15th due to a little known Washington D.C. holiday called Emancipation Day that celebrates the freeing of slaves in the area.
Click for a Ginormous (and readable) Image
Now here’s something I didn’t know about how the tax code used to work:
In the 1930s, there were more than 50 [brackets]. The Wealth Tax Act of 1935, applied the top rate to income over $5 million and had only a single taxpayer: John D. Rockefeller, Jr.
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Marginal tax rates mean nothing.
Effective tax rates are all that matter.
How many individuals actually paid the 70% rate during the 70’s? It only applied to incomes over $215,400 (which is equivalent to roughly $1,000,000 today), and that was after all the tax deductions/credits which were subsequently eliminated under TEFRA in 1982.
I would be curious to see Effective tax rates between 1913 and 2011.
Also, I find it fascinating that the USA survived for nearly 140 years and became a world power (with Teddy’s “Big Stick” navy) all without an income tax.
Since Inaugural Day I’ve gone from the top tax bracket to the U.S. government paying me a net $2,500 last year—yet I still collected a further $4,000 tax refund. Now if only I could afford groceries…