I was reading an article on Vox about tax brackets, but found something far more interesting.
In the article is a graph about history tax brackets and their historic rates.
According to Tax Foundation, in 2017 the lowest tax bracket (taxable income from $0 to $9,325) will owe 10% of their taxable income. The highest will be for anything over $418,400 will be taxed $121,505.25 plus 39.6% of everything over $418,400. For example, if you made exactly one million taxable dollars, you’d owe $351,818.85. And that is, of course, presuming I did my math right.
( ($1,000,000 - $418,400) * .396 + $121,505.25 = $351,818.85
Take that up to a billion dollars and we wind up with:
( ($10,000,000 - $418,400) * .396 + $121,505.25 = $3,915,818.90
For all these calculations, I’m presuming single income brackets, not married or head of household.
Let’s go back in time. In 1915, during the Wilson administration while the United States were involved in zero world wars. The Revenue Act of 1913 stated that anyone making over $500,000 a year would have a 7% tax rate.
If we were doing the math in October 1913 dollars (when the Revenue Act of 1913 went into effect, that’d be some simple math:
$500,000 * 0.07 = $35,000
Using the U.S. Bureau of Labor Statistics CPI Inflation Calculator calculating for $10,000,000 January 2017 dollars translated to $411,795.47 October 1913 dollars:
$411,795.47 * 0.07 = $28,825.68
The War Revenue Act of 1917 spikes the highest tax bracket to 67%, which would be increased to 77% the following year with the Revenue Act of 1918. After World War I, drop to a comparatively modest tax on the richest of households at 25%.
In 1933, FDR’s First New Deal comes into play, but the year before under the Hoover administration, the Revenue Act of 1932 charges any person making a million dollars a year or more, 63%. It also increased estate taxes and corporate taxes. I wonder how similar the Republican party that Hoover belonged to is to that of the GOP of today. The 1932 revenue act increased taxes across the board though, not just for the rich. Herbert Hoover signed it into law on June 6. On November 8th of that year, he lost his bid for re-election to FDR by what has been called a landslide.
If there is correlation between Hoover increasing the tax rate on the rich from 25% to 63% and the tax rate on the poor from 1.5% to 4% and the election of FDR, the voting public go the exact opposite of what they wanted. Under FDR, the tax rate for the poorest tax bracket hits a high of 23% and the rich? Try 94% for anyone making more than $200,000 a year (or in 2017 dollars: $2,791,252.87). FDR actually proposed a tax bracket that paid a 100% tax rate. Right now, France’s presidential candidate Jean-Luc Melenchon has similar ideas.
FDR’s New Deal comes and goes, World War II comes to a close late 1945, so taxes will be reduced, right? Incorrect. It is not until John F. Kennedy telling congress to slash the tax of the richest Americans from 91% to 65%, which is soundly rejected by Congress, and makes no real progress until LBJ is able to pass the Revenue Act of 1964. The richest Americans still pay 70% until the Reagan administration, where it is dropped to 50%. Then to a meager 31% in the first Bush administration, and has now crept back up to roughly 40%.