Wednesday, December 01, 2010

Representation Without Tax Legislation

Jim Gust called it right: "The clock ran out on this game in October, but no one wants to admit it yet." On TV tonight we heard the same soundbites about taxing or not taxing "the rich," recited from memory by members of Congress who know full well the Bush tax cuts will be extended, at least for a few years. There's really no alternative, as David Leonhardt explains in the NY Times.

This provocative pair of graphs accompanies Leonhardt's article. Only seriously high-income taxpayers were in the top bracket back in the 1960s. Trouble is, the near-the-top brackets were almost as onerous. In 1960 couples making the equivalent of $250,000 or more today generally faced a top rate of 50% or higher. See tax brackets and rates for selected years, (and remember to adjust for inflation). Tax addicts can also browse through Forms 1040 from times past.

On the web, the Times includes a feature from its archives, showing the highest incomes of 1943. Watson of IBM and Grace of Bethlehem Steel made over $500,000. In today's money that's over $6 million.

In 1943 John D. Rockefeller's income from all sources exceeded $5 million. Today's equivalent: over $62 million.

Maybe "income inequality" isn't a modern invention after all.


Jim Gust said...

Rates tell us little about actual tax burden. The rich are bearing the highest share of total taxes paid already, with significant hikes already scheduled for Obamacare. WSJ had a piece recently suggesting that whether rates are high or low, the Feds take 19% of GDP. All the rest is posturing.

Jim Gust said...
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