U.S. Tax Brackets Over the Decades

Go past the jump to see a pretty graphic depicting the change in our tax code since the Sixteenth Amendment was created in 1916.  The x-axis is Year and the y-axis is $2010, and the colors represent different tax brackets.  Here’s what I notice after looking at it for a few minutes:

1. Tax rates and brackets were pretty stable until we entered WWII.  The top tax rate got much lower at the end of the 1920s; perhaps the rich always get their taxes lowered when the increase in everyone’s income can mask the foregone tax revenue.
2. People making a lot of money paid a high marginal tax rate up until the Reagan era.  It was around 90% for those earning roughly $1million from WWII until the early 1960s, and then 70% until Reagan cut it to 50%.  The 70% figure also applied to more people, eventually all the way down to those earning “only” a couple hundred thousand dollars.
3. Reagan’s first tax reform still kept marginal rates higher than anyone today would (wrongly) accept and there were still many tax brackets.
4. The Tax Reform Act of 1986 really was a structural change.  The number of tax brackets went from fifteen to four, and the highest tax rate became 28%.  Tax rates were eventually raised for everyone above the 15% tax rate, or those earning about $50,000 dollars.  Bush’s tax cuts lowered tax rates for everyone, noticeably even those earning less than $10,000 (from 15% to 10%, technically a 50% tax reduction).
5. Our tax rates have experience a steady decline since the end of World War II.  We just don’t hear that narrative because people would then understand why we need to raise taxes on the rich.

From www.weathersealed.com