Historical Marginal Income Tax Rate Question

[Gates9]

Can someone tell me where I can find the historical federal income tax table from 1955 for all income levels?

I'm trying to figure out what my taxes would have be if the taxes were approximately the same. Not exactly apples to apples, I know. For one thing 1955, federal income tax law was comprised of 103 code sections. By 2005, there were 736 income tax code sections. So Tax law has gotten way more complicated.

I'm a bottom liner. In 1941 the top income tax level was 84% for people making wages or salary of $5,000,000 or more, per year. That's wages or salary, not to include capital gains, estate, etc. $5,000,000 in todays money is approximately $75,000,000.

Today the top marginal income tax rate is 35% for those making approximately $373,000 and above. When the Bush tax cuts run out, they will be 39%. Also, if you make more than $100,000, you don't have to pay into FICA (Social Security).

Now don't make the mistake of thinking that means 84% was deducted from someones income at that level, leaving them with $12,000,000 (a pittance, I know). That's not how the marginal tax rate works. It's applied MARGINALLY, by each tax bracket increase. It's hard to explain easily (there are some great videos on youtube), but the actual rate in question would have actually been much less than a straight 84% of the total.

Here's an entertaining attachment;

http://www.poconomountaintax.com/1040/f1040_1955.pdf

[ParkieDem]

1. Here is an embedded PDF

This shows marginal rates for each bracket going back to 1913. This is from a right-wing tax think-tank, but it's just raw data, not adjusted for inflation: http://www.taxfoundation.org/publications/show/151.html

When the income tax started, most everyone paid 1%. If you made more than $20,000 per year (about $430,000 in today's dollars), you paid 2%. If you made more than $500,000 per year (about $10 million in today's dollars), you paid 7%.

The highest historical marginal rate was in 1945, when people making more than $200,000 (about $2.3 million today) paid a marginal rate of 94%. The lowest marginal rate at that time was 23%, and there were many, many more brackets then than today.

The highest marginal rate stayed in the 90% until the Kennedy tax cuts, and it went to 70% and stayed there from 1965 to 1981. During that time, the lowest marginal rate was generally 14%, and again, you had many, many more brackets.

Overall, the lowest rates were from 1988 to 1990, when the highest marginal rate was 28% and the lowest was 15%. There were only three brackets during this period.

[Gates9]

2. Awesome, thx

This gives me some idea of what it would be as far as marginal rates go. But it doesn't show the actual income brackets. Do you have a source for those? I started filling out the PDF I posted, but it's missing the instructions, so I don't have the brackets.

[A HERETIC I AM]

3. That link does show you the brackets.

For instance, in 1973, the 28% bracket for married filing jointly was from $16,000 to $20,000.

Look again and enlarge the document using the sliders. If I can find it, so can you!

[Yupster]

7. Please understand though that no one

ever paid those type of rates.

The tax code was way different back then.

There were many times the deductions that there are today. The deductions mostly ended in 1986.

Just as a couple of examples, all different types of interest costs were deuctible besides mortgage including car loans and credit cards.

I was in a tax credit investment that over 10 years paid 200 % of the investment amount in tax credits. Boy did those limited parterships get killed when the 86 budget deal was passed.

Anyway, people see the 80 % tax bracket and think people paid 80 %.

Not even close.

[One_Life_To_Give]

4. Is historical type of income distribution today similar to 1945?

Is historical type of income distribution today similar to 1945?
That is did CEO's and others high income individuals obtain similar ratios of income from Wages versus Capital Gains. Or was compensation adjusted so that the effective combined tax rate was lower. And how would that rate compare over time?

[Gates9]

6. I'm no tax expert

but it would seem that the "high income" class you speak of has effectively infiltrated our legislative bodies to the end that most of our tax policies favor corpotaions and high income earners.

Not much for data, but I've read a lot of interesting stuff on tax shelters and breaks for corporations, the dismantling of the estate tax. etc.

Paul Krugman or Thom Hartmann would be good places to start finding info related to wage inequality (as Thom puts it)

[dtotire]

5. Try this web site--Gives top rates from 1913 and up

http://www.truthandpolitics.org/top-rates.php#fn-2