Top Marginal US Tax Rates - 1916 -2010

[Donnachaidh]

http://www.creditwritedowns.com/2011/04/top-marginal-us-tax-rates-1916-2010.html

Here's a great graph of US income tax rates back to when personal income taxes were started from Visualizing Economics (hat tip Barry Ritholtz). You can see the marginal rate for personal income has come way down from its 1945 peak.

A few months ago, Michael Hudson answered the question, "Why Did America Have A 90% Income Tax Under Eisenhower? ". He says the original premise of the income tax law was based on 18th and 19th century classical economics and the price theory of economic rent. First and foremost, Hudson says that meant to the economists of the late 19th century and early 20th century that America would get rich through productivity gains that came from the work of highly paid labour. Hudson argues that is why Asia is more productive today: because living standards are increasing. However, to the degree one made considerably more than the average income, Hudson argues it was assumed in the early 20th century that this was the result of rent-seeking or monopoly privilege of the sort we saw during feudalism. Therefor this income was largely taxed away.

Watch the video for his answer, but this quote from another post of his below gives you the gist.

Smith argued, its industrial capitalism would have to shed the vestiges of feudalism. Ground rent charged by its landed aristocracy should be taxed away, on the logic that it was the prototypical “free lunch” revenue with no counterpart cost of production. He noted at the outset (Book I, ch. xi) that there were “some parts of the produce of land for which the demand must always be such as to afford a greater price than what is sufficient to bring them to market.”



More at the link --

[RobertSeattle]

1. Thanks

Who would have ever thought we'd say "Can we go back to the Reagan era tax rates please"? :-)

[Pab Sungenis]

3. My thought exactly.

They love Reagan so much, how could they turn down a chance to go back to Reagan's 1982-1985 tax levels?

[Tom Rinaldo]

2. K&R n/t

[JHB]

4. 55 minus 10

Take the income tax rates from 1955 but lop 10% off the bracket rate (20% becomes 10%, 22% become 12%, all the way up to 91% becomes 81%).

Adjust the cash levels by a factor of 10 (the 1955 standard deduction of $600 becomes $6000, the interval between brackets at the lower levels of $4000 becomes $40,000, etc.)

When you get called a communist (no question of "if" these days), throw it back at them: these rates are lower than what was in practice in this country during the deepest part of the Cold War. If we were "communists" back then, just what were the Soviets exactly?

This isn't just a matter of "soak the rich". If you want "trickle down" to actually trickle down and circulate throughout the economy, you need some mechanism keep the highest levels from soaking up everything they can. A list on the pot, so to speak.

[yodermon]

5. Wow, look at that. Tax rates plunged right before the Great Depression.

Huh.

[Uncle Joe]

6. Kicked and recommended.

Thanks for the thread, Donnachaidh.

[Donnachaidh]

7. my pleasure ;-) n/t