3 ms·

I don't think anyone on either side of this thread is confused by this simple concept. But perhaps in writing your own comment you realize how unprogressive the

I don't think anyone on either side of this thread is confused by this simple concept. But perhaps in writing your own comment you realize how unprogressive these tax brackets are. You start paying pretty close to the top rate on income over 44,000. And then it stops increasing at a tiny fraction of the incomes of the truly wealthy (the wealthiest of whom don't need help from offshore tax gymnastics -- they just pay the highest rate on the capital gains bracket which is even LESS progressive). Not to mention people making ~400K are also significantly affected by employment taxes (social security and medicare) which are extremely anti-progressive. So a tax increase at 400K will indeed affect someone who makes 400K (or maybe ~450K, or someone who files jointly) now or in the ensuing years when they get raises to combat inflation. The brackets never keep up with inflation, because the government uses CPI to pretend like there isn't much inflation. The highest bracket in 1913 was 1 million dollars (NOT ADJUSTED FOR INFLATION).

gzer0 5y ago
Sure, the tax bracket in 1913 might have been 1 million USD (not adjusted for inflation). The highest tax bracket was also paying 67 percent in 1917 and 77 percent in 1918 [1]. During WW2, the tax rate for the highest bracket jumped to a whopping 94% [1]. Most people don't realize how low the rates have gotten compared to previous times. Subsequently, as rates have gotten lower, the income inequality gap is near all-time highs [2]. [1] https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco... [2] https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/ https://www.pewresearch.org/social-trends/2020/01/09/trends-... Note: I'm not saying correlation = causation; just an interesting phenomenon to notice.
- lend000 5y ago
  I'm in agreement. But to tax people 67% starting at 400K is ludicrous to me, barring emergency wartime measures (although nowadays the Fed would just print the money and dissolve the value of USD). That 67% rate was for income over TWO MILLION (not inflation adjusted). Using the extremely conservative CPI figure, that's over $25M USD today. Using the median price of a home in the US for inflation, that's nearly $100M. A much more sensible maximum bracket than what we have today. The point is that the distribution of tax rates is broken, with no statement made about the rates themselves.

gzer0 5y ago

Sure, the tax bracket in 1913 might have been 1 million USD (not adjusted for inflation). The highest tax bracket was also paying 67 percent in 1917 and 77 percent in 1918 [1]. During WW2, the tax rate for the highest bracket jumped to a whopping 94% [1]. Most people don't realize how low the rates have gotten compared to previous times. Subsequently, as rates have gotten lower, the income inequality gap is near all-time highs [2]. [1] https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco... [2] https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/ https://www.pewresearch.org/social-trends/2020/01/09/trends-... Note: I'm not saying correlation = causation; just an interesting phenomenon to notice.

lend000 5y ago
I'm in agreement. But to tax people 67% starting at 400K is ludicrous to me, barring emergency wartime measures (although nowadays the Fed would just print the money and dissolve the value of USD). That 67% rate was for income over TWO MILLION (not inflation adjusted). Using the extremely conservative CPI figure, that's over $25M USD today. Using the median price of a home in the US for inflation, that's nearly $100M. A much more sensible maximum bracket than what we have today. The point is that the distribution of tax rates is broken, with no statement made about the rates themselves.