5 ms·

What were the biggest deductions that don’t exist today?

khuey 4y ago
On the individual side, all personal interest (e.g. credit card interest) was deductible and you could claim dependents (and their corresponding deductions) without any evidence (like a child's social security number).
- themitigating 4y ago
  The second deduction you mention is just tax fraud. If they didn't have stringent checks that doesn't make it a valid deduction compared to today
- HWR_14 4y ago
  The second one isn't a deduction, it was inadequate fraud and tax evasion detection. It's like saying that the tax rates didn't matter back then because you were a child and therefore paid no tax.
  - throwaway0a5e 4y ago
    Regardless, in aggregate it means the effective rate was lower. If the subway costs $1 and 50% of the jump the turn-style 50% of the time the cost to ride the subway in aggregate is $0.75 Sure, if you take some asinine ideological hard line about the goodness or badness of taxation you'll probably get your panties in a knot but if you look at it from the perspective of who's spending money in the economy a little bit of broadly applied fraud and a little bit of tax reduction are the same thing because they shuffle money around in the same manner.
    - JackFr 4y ago
      > asinine ideological Sometimes called “principled”
      - throwaway0a5e 4y ago
        It may be derived from principal but that does not change the fact that pretty much any take that's out there on either extreme (in this case "taxation is theft" on one side and "taxes are inherently good" on the other) is going to be regarded as asinine by the bulk of the population. Do you disagree?
        HWR_14 4y ago
        No. I'm willing to stand that the majority of the population will agree that outright lying about numbers on your tax forms to "lower your bill" is wrong.
    - HWR_14 4y ago
      > If the subway costs $1 and 50% of the jump the turn-style 50% of the time the cost to ride the subway in aggregate is $0.75 No, you have jumpers whose aggregate cost is $0.50 and non-jumpers whose aggregate cost is $1.00. The revenues realized are $0.75 a ride, but the costs aren't distributed evenly. If the jumpers were caught, then the cost could decline to $0.75, the nonjumpers would pay less and the jumpers would pay more. That world is better for the half of the population that doesn't jump.
- wil421 4y ago
  People can still claim children without any evidence. I worked with a cook who claimed like 6 or 7 kids. He never filed taxes at the end of the year so he didn’t need a SSN for them.
  - cupofpython 4y ago
    this is just called tax evasion back then you could file your taxes with 6 or 7 kids and no one would check that is not the same as claiming you have 6 or 7 kids that will be filed on your taxes and then just never filing it. Once filed he would need SSN for those kids, or he would owe taxes
  - hnburnsy 4y ago
    Might be missing out on EITC where the federal government would pay him (negative tax rate)
ameister14 4y ago
So there were a few. One of the biggest was that there was an investment tax credit of 7% in the 60's and 10% in the 70's, which I believe was uncapped. I think those were also able to be rolled over to cover multiple years. That means that if you invested enough, you could pay essentially no taxes. This was repealed in 1986. [edit] Another that I should probably mention is the treatment of asset depreciation; in the 1960's and 70's the government was incredibly generous with regards to asset depreciation. For example, they allowed more rapid depreciation so you can have assets fully depreciated while still within their useful life and potentially if you sold those would pay capital gains tax on them, meaning you reaped significant tax savings over the asset's lifetime.
- PopAlongKid 4y ago
  >[edit] Another that I should probably mention is the treatment of asset depreciation; in the 1960's and 70's the government was incredibly generous with regards to asset depreciation. That is pretty much how it is today as well. 100% bonus depreciation, Sec. 179, and the safe harbor for writing off pretty much any item under $2,500 as an expense, are all in place currently, and the favorable treatment of subsequent gain from sale is still there too.
  - ameister14 4y ago
    I think 62-21's creation of broad industry classifications expanded rates of depreciation for a wide variety of assets, though; I'm pretty sure that was re-structured in the 80's, not sure if it was part of the 1986 Tax regulations but likely around that time.

On the individual side, all personal interest (e.g. credit card interest) was deductible and you could claim dependents (and their corresponding deductions) without any evidence (like a child's social security number).

themitigating 4y ago
The second deduction you mention is just tax fraud. If they didn't have stringent checks that doesn't make it a valid deduction compared to today
HWR_14 4y ago
The second one isn't a deduction, it was inadequate fraud and tax evasion detection. It's like saying that the tax rates didn't matter back then because you were a child and therefore paid no tax.
- throwaway0a5e 4y ago
  Regardless, in aggregate it means the effective rate was lower. If the subway costs $1 and 50% of the jump the turn-style 50% of the time the cost to ride the subway in aggregate is $0.75 Sure, if you take some asinine ideological hard line about the goodness or badness of taxation you'll probably get your panties in a knot but if you look at it from the perspective of who's spending money in the economy a little bit of broadly applied fraud and a little bit of tax reduction are the same thing because they shuffle money around in the same manner.
  - JackFr 4y ago
    > asinine ideological Sometimes called “principled”
    - throwaway0a5e 4y ago
      It may be derived from principal but that does not change the fact that pretty much any take that's out there on either extreme (in this case "taxation is theft" on one side and "taxes are inherently good" on the other) is going to be regarded as asinine by the bulk of the population. Do you disagree?
      - HWR_14 4y ago
        No. I'm willing to stand that the majority of the population will agree that outright lying about numbers on your tax forms to "lower your bill" is wrong.
  - HWR_14 4y ago
    > If the subway costs $1 and 50% of the jump the turn-style 50% of the time the cost to ride the subway in aggregate is $0.75 No, you have jumpers whose aggregate cost is $0.50 and non-jumpers whose aggregate cost is $1.00. The revenues realized are $0.75 a ride, but the costs aren't distributed evenly. If the jumpers were caught, then the cost could decline to $0.75, the nonjumpers would pay less and the jumpers would pay more. That world is better for the half of the population that doesn't jump.
wil421 4y ago
People can still claim children without any evidence. I worked with a cook who claimed like 6 or 7 kids. He never filed taxes at the end of the year so he didn’t need a SSN for them.
- cupofpython 4y ago
  this is just called tax evasion back then you could file your taxes with 6 or 7 kids and no one would check that is not the same as claiming you have 6 or 7 kids that will be filed on your taxes and then just never filing it. Once filed he would need SSN for those kids, or he would owe taxes
- hnburnsy 4y ago
  Might be missing out on EITC where the federal government would pay him (negative tax rate)

ameister14 4y ago

So there were a few. One of the biggest was that there was an investment tax credit of 7% in the 60's and 10% in the 70's, which I believe was uncapped. I think those were also able to be rolled over to cover multiple years. That means that if you invested enough, you could pay essentially no taxes. This was repealed in 1986. [edit] Another that I should probably mention is the treatment of asset depreciation; in the 1960's and 70's the government was incredibly generous with regards to asset depreciation. For example, they allowed more rapid depreciation so you can have assets fully depreciated while still within their useful life and potentially if you sold those would pay capital gains tax on them, meaning you reaped significant tax savings over the asset's lifetime.

PopAlongKid 4y ago
>[edit] Another that I should probably mention is the treatment of asset depreciation; in the 1960's and 70's the government was incredibly generous with regards to asset depreciation. That is pretty much how it is today as well. 100% bonus depreciation, Sec. 179, and the safe harbor for writing off pretty much any item under $2,500 as an expense, are all in place currently, and the favorable treatment of subsequent gain from sale is still there too.
- ameister14 4y ago
  I think 62-21's creation of broad industry classifications expanded rates of depreciation for a wide variety of assets, though; I'm pretty sure that was re-structured in the 80's, not sure if it was part of the 1986 Tax regulations but likely around that time.