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There were a lot more exemptions, deductions and credits back then so the effective tax rate was not even close to 70% and was not much higher than it is today.

There were a lot more exemptions, deductions and credits back then so the effective tax rate was not even close to 70% and was not much higher than it is today. Not sure why this article didn't mention this at all but I can guess, coming from the New York Times and all.

fiter 7y ago
I believe the nominal tax rate now is not ~20%, so then the graphs are all showing effective, not nominal, and their point stands.
apazzolini 7y ago
Since you're so sure of your viewpoint and the NYT's bias, it should be really easy for you to go into more detail here, right? (I'm not expecting a thorough response from you, don't worry)
- ytNumbers 7y ago
  https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
  - apazzolini 7y ago
    See the rest of the comments on this post to understand why this link isn't useful in the discussion of taxes on the top 0.01%, which is the subject of the parent article.
    - ytNumbers 7y ago
      One aspect of what can be found in the NYT article is a graph that shows the people at the very top of the income pyramid paying a 70% tax rate in 1950. However, there's a nominal tax rate versus what someone actually winds up paying after various deductions an loopholes. An earlier study by the same authors of this latest publication that the NYT is citing indicates that those in the top 1% were paying around 40% in 1950. Based on that, I find the claim that those at the very top paid 70% in 1950 to be highly doubtful. Am I right about this? Well, I guess I'll have to wait a week for this latest book to be published, or until the NYT issues a correction. The earlier study from these same authors, which was cited in the link I posted above, can be found at: https://academic.oup.com/qje/article/133/2/553/4430651/ https://academic.oup.com/qje/article/133/2/553/4430651/
  - ilikehurdles 7y ago
    Posting a libertarian think-tank link adds no value as an answer to a comment asking for someone to explain their perceived bias of NYT articles on tax policy.
ChrisAntaki 7y ago
I'd like to read up on the exemptions, deductions, and credits you mentioned. Is there a link you'd recommend?
taeric 7y ago
Claims like this would feel a lot stronger with evidence. Especially since it seems counter intuitive to have fewer deductions and credits in the modern world. Those numbers would, intuitively, go up in time. Just on how rarely we talk of expiring them.
xenocyon 7y ago
Of course it's true that the effective rate was less than 70% (that was the top _marginal_ rate, just like 37% is the top marginal rate today); however I am curious to hear about the exemptions etc for rich people - my understanding is that these have gotten larger and more complex over time so it's surprising to me to hear that there were more loopholes in the 50s than today. Is there a source for this?
- coredog64 7y ago
  One used to be able to deduct any interest, not just mortgage interest. There was a sweetheart deal for oil production, to the point that 50s Hollywood actors would form corporations that mixed film production with oil business. Capital gains were quasi indexed to inflation in that your first 50% wasn’t subject to gains taxes. The whole point of the changes in 86 (aka Reagan tax cuts) was to remove all those deductions/loopholes/shelters in return for a lower nameplate rate. The goal was to clear out bullshit stuff people were doing for tax reasons and replace it with useful economic activity.
- taeric 7y ago
  Famously, the nominal top rate used to be in the nineties.

fiter 7y ago

I believe the nominal tax rate now is not ~20%, so then the graphs are all showing effective, not nominal, and their point stands.

apazzolini 7y ago

Since you're so sure of your viewpoint and the NYT's bias, it should be really easy for you to go into more detail here, right? (I'm not expecting a thorough response from you, don't worry)

ytNumbers 7y ago
https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
- apazzolini 7y ago
  See the rest of the comments on this post to understand why this link isn't useful in the discussion of taxes on the top 0.01%, which is the subject of the parent article.
  - ytNumbers 7y ago
    One aspect of what can be found in the NYT article is a graph that shows the people at the very top of the income pyramid paying a 70% tax rate in 1950. However, there's a nominal tax rate versus what someone actually winds up paying after various deductions an loopholes. An earlier study by the same authors of this latest publication that the NYT is citing indicates that those in the top 1% were paying around 40% in 1950. Based on that, I find the claim that those at the very top paid 70% in 1950 to be highly doubtful. Am I right about this? Well, I guess I'll have to wait a week for this latest book to be published, or until the NYT issues a correction. The earlier study from these same authors, which was cited in the link I posted above, can be found at: https://academic.oup.com/qje/article/133/2/553/4430651/ https://academic.oup.com/qje/article/133/2/553/4430651/
- ilikehurdles 7y ago
  Posting a libertarian think-tank link adds no value as an answer to a comment asking for someone to explain their perceived bias of NYT articles on tax policy.

ChrisAntaki 7y ago

I'd like to read up on the exemptions, deductions, and credits you mentioned. Is there a link you'd recommend?

taeric 7y ago

Claims like this would feel a lot stronger with evidence. Especially since it seems counter intuitive to have fewer deductions and credits in the modern world. Those numbers would, intuitively, go up in time. Just on how rarely we talk of expiring them.

xenocyon 7y ago

Of course it's true that the effective rate was less than 70% (that was the top _marginal_ rate, just like 37% is the top marginal rate today); however I am curious to hear about the exemptions etc for rich people - my understanding is that these have gotten larger and more complex over time so it's surprising to me to hear that there were more loopholes in the 50s than today. Is there a source for this?

coredog64 7y ago
One used to be able to deduct any interest, not just mortgage interest. There was a sweetheart deal for oil production, to the point that 50s Hollywood actors would form corporations that mixed film production with oil business. Capital gains were quasi indexed to inflation in that your first 50% wasn’t subject to gains taxes. The whole point of the changes in 86 (aka Reagan tax cuts) was to remove all those deductions/loopholes/shelters in return for a lower nameplate rate. The goal was to clear out bullshit stuff people were doing for tax reasons and replace it with useful economic activity.
taeric 7y ago
Famously, the nominal top rate used to be in the nineties.