Tax Bracket "Heat Map"

[oddlots]

Amazing graphic representation of changes in tax brackets over time:

http://paul.kedrosky.com/WindowsLive...brackets_2.jpg

Could be useful evidence in the ongoing culture wars that take the place of bridge on this site.

[Rajiv]

Re: Tax Bracket "Heat Map"

Amazing graphic representation of changes in tax brackets over time:

http://paul.kedrosky.com/WindowsLive...brackets_2.jpg

Could be useful evidence in the ongoing culture wars that take the place of bridge on this site.

The picture is incorrect, as the data is only for net taxable income, and not for gross income -- does not factor in exempt income. Which is what is lreads to the anamoly of 0% bottom tax rates from 1978 to 1986

for example , in 1913, the lowest tax bracket is shown as 4%. But the first $3000 (1913$) was exempt from income tax -- which is $67,000 (BLS) $225,000 (Shadowstats) in 2010

Further, Social Security taxes are not included in the picture, which are burdensome on the lowest income earners.

[oddlots]

Re: Tax Bracket "Heat Map"

Yay, now I get to demonstrate the fact that I didn't really understand it even in visual form... with Rajiv no less!!!!

So the thing seemed interesting to me because it showed:

- a real peak of "progressive taxation" between ~ 1940s and early 60s
- an extreme "sensitivity" to changes in income in lower tax brackets re the tax burden up to the late eighties where it suddenly became a simple question of 4 or 5 tax brackets (good or bad thing?)
- a surprisingly flat tax result at present (again, good or bad thing?)

I understand this

in 1913, the lowest tax bracket is shown as 4%. But the first $3000 (1913$) was exempt from income tax -- which is $67,000 (BLS) $225,000 (Shadowstats) in 2010

... to mean that it's fatal to the chart that it doesn't adjust for inflation and that makes perfect sense. Originally I thought the point was to show trends but that now seems misleading since there's big difference between the first $3000 / $67000 and the second, third, or (gasp) fourth obviously. Was that your point or have I garbled it?

By the same logic both the data not introduced because a) tax exempt (capital gains I suppose) b) state imposed social security, would change the picture very substantially.

But it was pretty didn't you think?

[immoegreen]

Re: Tax Bracket "Heat Map"

Rajiv great catch! Its fascinating how the mass media does not understand inflation and the plethora of hidden taxes. Always thought it funny how when I lived in Spain I was struck that sure the federal tax was higher than the u.s. but hey no state taxes, SS or FICA. Oh the schools were great and the kids got to go to college free. Point--its the rates but also--what are we getting for our taxes lately? Ha as a young man starting out I earned 38k in 1980 and let me tell you I could not by that lifestyle for 200k today.......

[oddlots]

Re: Tax Bracket "Heat Map"

Errr, now I'm very confused... It's apparently indexed to 2010 dollars... not that that effects the points about exemptions or social security...

[flintlock]

Re: Tax Bracket "Heat Map"

Rajiv is correct. To get an accurate comparison you must include gross income. In fact, to really be accurate, you must factor in ALL taxes citizens pay in order to really see how far we've come. That means FICA, state, local, property, ad valorem, phone taxes etc. Death by a thousand cuts.

[don]

Re: Tax Bracket "Heat Map"

Don't overlook the shift in top level compensation to capital gains income and corporate perks and away from straight taxable income, options unavailable to most.

[Rajiv]

Re: Tax Bracket "Heat Map"

The Lowest - highest tax brackets can be found here www.irs.gov/pub/irs-soi/histaba.pdf

See particularly footnote [3] and footnote [28]

As for inflation using both the BLS CPI, and the shadowstats CPI can be very useful and instructive. Shadowstats CPI calculator will give you both numbers

[ThePythonicCow]

Re: Tax Bracket "Heat Map"

The Lowest - highest tax brackets can be found here www.irs.gov/pub/irs-soi/histaba.pdf

See particularly footnote [3] and footnote [28]

That histaba.pdf link does not work for me. The closest I can find is an xls spreadsheet Table 24. U.S. Corporation Income Tax: Tax Brackets and Rates, 1909-2010, but it lacks a footnote 28, so is probably not what you had in mind.

P.S. -- Ah, these look closer to what you had in mind. SOI Tax Stats - SOI Bulletin - Historical Tables and Appendix, U.S. Individual Income Tax: Personal Exemptions and Lowest and Highest Bracket Tax Rates, and Tax Base for Regular Tax, and Personal Exemptions and Individual Income Tax Rates, 1913-2002 (pdf).

[hayekvindicated]

Re: Tax Bracket "Heat Map"

Rajiv great catch! Its fascinating how the mass media does not understand inflation and the plethora of hidden taxes. Always thought it funny how when I lived in Spain I was struck that sure the federal tax was higher than the u.s. but hey no state taxes, SS or FICA. Oh the schools were great and the kids got to go to college free. Point--its the rates but also--what are we getting for our taxes lately? Ha as a young man starting out I earned 38k in 1980 and let me tell you I could not by that lifestyle for 200k today.......

Wow. You cannot buy the lifestyle you enjoyed in 1980 with US$38,000 with US$200,000 in today's money? Could you elaborate a bit more?

Too many people rely on the CPI as a measure of inflation. In CPI terms, $1 in 1980 equals $3 today. Your experience seems to show that $1 back then was more like $6 today. On that basis the gold price today should be $5000 an ounce AT LEAST!

[Rajiv]

Re: Tax Bracket "Heat Map"

That appears to have been an older link. However, I am attaching the original file

histaba.pdf

[Rajiv]

Re: Tax Bracket "Heat Map"

If you use the shadowstats CPI calculator $100 in 1980 equals $271 using BLS numbers, but using the older methodology used by shadowstats, you get $100 in 1980 equals $950 today. From a lifestyle perspective, Shadowstats is a good measure.

[radon]

Re: Tax Bracket "Heat Map"

Wow. You cannot buy the lifestyle you enjoyed in 1980 with US$38,000 with US$200,000 in today's money? Could you elaborate a bit more?

Never mind I'm also confused.