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Are all the dollar amounts in the simulated tax output at the top of the page inflation adjusted? For example, I inputted married, with no dependents with $500

• nicoburns 4y ago
  A quick google shows that yes, there was a 70% marginal tax rate (applying to income over $108,300 - not inflation adjusted - for a single filer) as recently as 1981 https://taxfoundation.org/historical-income-tax-rates-brackets/ https://taxfoundation.org/historical-income-tax-rates-bracke...
  • sgjohnson 4y ago
    But nobody ever paid it as there were millions of loopholes.
    • thnujmikkkk 4y ago
      source?
    • deleted 4y ago
      [deleted]
    • standardUser 4y ago
      You have to be actually wealthy for most "loopholes" come into play. Just like today, non-wealthy high earners take the biggest hit in taxes. And there are way more of those than actually wealthy people. Back then, the hit was even bigger, but the group being hit the hardest was smaller. Politically, this setup seems to help keep those high-earners voting for lower taxes, which makes sense to them since they're the ones paying the highest overall rate.
      • refurb 4y ago
        You did have to be wealthy, but $100,000 in 1980 is equivalent to $383,000 today which is pretty wealthy. So it’s basically income above $400,000 today. And many of the tax “loopholes” involved real estate investment which would be accessible at that income level.
        • jliptzin 4y ago
          $380k is not wealthy. Most people can live just fine on $380k, don’t get me wrong, but it is basically upper middle class. If $380k/yr is wealthy then what is $20 million/yr?
          • trash_goblin 4y ago
          • LeonB 4y ago
            “More wealthy”? 100K in 1980 was sufficient to build and compound your wealth. That’s wealthy.
          • BoiledCabbage 4y ago
            While technically a better term for assets than income, we'll continue to use "wealthy". You should realize that multiple things can be wealthy. $380k is wealthy and $20M is also wealthy. $20M is wealthier than $380k. Im the US, an income of $380k is the 99th percentile. In a higher COL state of California, an income of $380k is still in the 99th percentile. And for the very high COL city of San Francisco, an income of $380k is still just about the 99th percentile If a person is making $380k, regardless of what they may believe, they are absolutely not middle class in any way shape or form. They are "wealthy".
            • zizee 4y ago
              I think you should not be redefining what words mean to make your argument. Wealthy means to have wealth. Wealth is the abundance of financial assets. Income can become wealth if saved/invested, but it is not wealth. There are numerous definitions of middle class, with many being "not upper, not lower". Upper class is defined as those that have the most wealth (explicitly not income) and political power. $People with 380k of income, but without significant assets are not upper class. They would be considered upper middle class. https://www.merriam-webster.com/dictionary/wealthy https://www.merriam-webster.com/dictionary/wealthy https://en.wikipedia.org/wiki/Wealth https://en.wikipedia.org/wiki/Wealth https://en.wikipedia.org/wiki/Middle_class https://en.wikipedia.org/wiki/Middle_class https://en.wikipedia.org/wiki/Upper_class https://en.wikipedia.org/wiki/Upper_class
    • UncleMeat 4y ago
      Up thread somebody asked what these were. A response had credit card interest deductions (rich people aren't running a credit card debt today, and certainly not in 1970) and easier tax fraud. This is such a compelling narrative for the "taxes should be lower" crowd that I'm skeptical. Granted, this is my personal bias. But I would love to see the actual clear examples of how people are deducting like 50% of their income or whatever they'd need to bring their 70% marginal rate down to 35%.
      • brewdad 4y ago
        In the 80s mortgage rates hit 20%. So there's a start. Wages weren't quite as skewed to the high end as they are today. The gap between low middle, middle, and upper middle was not as wide, so it was less likely to hit the threshold for the 70% bracket. There were far more single income families, so again, not as likely to hit the threshold. Finally it's a marginal rate. Only income above the threshold would be taxed that much, not one's entire income.
• jandrewrogers 4y ago
  In the 1970s there were massive tax deductions that don't exist today, so the actual tax incidence was much lower than what is implied by the marginal tax rates. There was a major overhaul of the tax code in the 1980s that simultaneously eliminated many of the tax deductions and offset that loss of deductions with lower the marginal tax rates. The change was approximately revenue neutral but made the tax code simpler.
  • ajmurmann 4y ago
    seems like this would render the website pretty useless for anything before that period, right?
    • sieabahlpark 4y ago
    • femiagbabiaka 4y ago
      It’s not useless, it’s just data which needs context. Like the claim which GP makes that the Reagan tax reform was “revenue neutral” which is dubious at best.
      • jandrewrogers 4y ago
        Tax revenues grew monotonically across the tax reforms of the 1980s in smoothly boring fashion with no discontinuities. That is pretty much a textbook definition of "revenue neutral". Are you arguing that the tax revenue grew too quickly to be defined as "revenue neutral"? I'm not old enough to have experienced it but the data is really obvious.
        • taurath 4y ago
          Would guess the idea is more about who pays that similar revenue, as since the 80s income inequality has shot upwards.
• Melatonic 4y ago
  Do you mean are the brackets themselves tax adjusted or the salaries? Because lets say there is a 300-500k bracket right now - that bracket (if it even existed in the 70s) would have been much, much higher.
  • Nition 4y ago
    Agreed in principle, but I think you mean much lower?
• gopi 4y ago
  Yes, the marginal income taxes were high but the capital gain taxes were low, so the rich didn't pay much. For example when the top income tax was 91% in the 1950s the capital gain tax was just 25%. See the historical top income and capital gain tax rates here https://ctj.org/pdf/regcg.pdf https://ctj.org/pdf/regcg.pdf
• ren_engineer 4y ago
  as others stated there were a lot more loopholes the other thing people don't mention is that companies got around higher tax rates by giving benefits like company cars and other things to entice employees when giving a higher salary would be stupid due to high tax rates. This is how things like health insurance ended up getting tied to employment, always unintended consequences
  • sharkmerry 4y ago
    It actually wasnt taxes with health insurance. They froze wages during ww2 but exempted health insurance from the cap. Same result. different cause (in this case)
  • calvinmorrison 4y ago
    I was going to bring this up! good call out
• lend000 4y ago
  The top tax bracket in 1913, the first year of the federal income tax as it exists today, was equivalent to ~14 million dollars at today's value. Our wealth inequality problems could largely be solved by fixing the tax brackets (especially w.r.t. capital gains). We don't need all sorts of new taxes, certainly not a wealth tax, before fixing the obvious problem. That being said, $500,000 should have been taxed more heavily in 1977 relative to today in a perfect world, because that amount of money was worth a lot more back then. I don't think the numbers are inflation adjusted or it would make sense to do so without a big warning.
• pjc50 4y ago
  I would not expect this to cope with inflation but to operate purely on nominal values; after all, that's what you'd put in the tax returns for those years.