Historical Tax Rates by Income Group [NYTimes]

by Catherine Mulbrandon on November 3, 2007

A recent NY Times article included a graph showing the amount of taxes paid to the federal government based on income groups. While I like the graph it does not explain what the income thresholds are for each income group. However, I was able to pull out of the original journal article that the average income for the highest earning 0.01% was $18,113,612.

taxes

See also: What does Top 1%, Top 0.1%, Top 0.01% mean?
2005 US Income Distribution part 3

[tags]NYTimes, Taxes, income inequality, wealth, income distribution, superrich[/tags]

Tagged as: Income - High, Income - Low, Pitketty & Saez, Tax Rates, United States

  • http://tjic.com TJIC

    It would be interesting to see GDP growth rates plotted in there too, to see if there’s a correlation between marginal tax rates and growth.

  • Kevin

    If the start of the graph were to be the begining of the 1900′s instead of 1960′s a very different picture would emerge.

  • http://cttaxed.com P Henry

    vs GDP AND starting in 1900.
    Now that would tell us something.
    Me thinks starting in the 1960s gives the impression that the more modern tax rates are a aberration, whereas I think the 1960 tax rate was the aberration.

  • jsowers

    the newyork times is the aberation

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  • Gramatan

    The question that I beleive is where the recent trend of responsability for tax burden is moving. Is the proportional burden proportionate to the proportional income and weather should it be based upon various groups productivity. It is disengenuous to posit about the trend from 1900′s original tax structure was created because it was as we all know only to effect the super rich. However, it highlightes the tax creep that all groups are chafing about.

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  • http://none AM

    What this doesn’t show and which renders this chart useless is that effective (the real rates paid) tax rates for all US households have declined 50% for the lowest quintile wage earners from 1979-2005 while only 7% for the highest quintile from 27.5% to 25.5%. The impact of standard deduction and personal exemption have a significant effect on the real income taxed at lower wage levels which must be considered when understanding who pays and how much.

  • http://www.seeingfinance.com Paul

    Thanks for this Catherine..

    @AM, yes it would be helpful to consider effective tax rates paid after adjustments and credits.

    What exactly is the y-axis measuring? A summation of all taxes paid -or- a weighted summation of applicable rates -or- what?

    Less on economic charts and graphs, more about financial literacy of the masses, please promote this visual explanation of income taxes (http://www.seeingfinance.com/?p=88) and get in touch if you would like to contribute.

  • Robert Jacobs

    Was searching for taxes paid by income and this link came up.

    The NYT is a source of misinformation. Of course tax RATES have come down, Kennedy and
    Reagan both did that, as did Bush II. The issue is NEVER just the rates, but how much money is raised at the various rates. Just because a taxpayer is at rate X does not mean he will pay rate X. Deductions make big differences.

    The only true concern over tax policy is “WHAT RATES MAXIMIZE REVENUE?”. The NYT knows that as the top rate declined, MORE income tax revenue was received from the “rich”. But, of course, it does not want to discuss this. The reader has to go to other places like the following links:

    http://www.taxfoundation.org/news/show/250.html
    http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes
    http://www.thepolicyreport.net/2009/01/05/californias-lopsided-income-tax-system/

    to find out what the effect of tax rates is upon tax revenue. Apparently, some of the comments here figured that out.

    The NYT is worse than bigoted, it is a source of MISinformation.

  • BD

    AM and Robert are exactly correct. Refer to http://www.cbo.gov/doc.cfm?index=8885 where it shows that the effective tax rate paid for the top quintile of tax payers had a slightly rising trend over a similar period. Whereas the effective tax rate paid for the bottom four quintiles all decreased. The bottom quintile decreased the most.

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  • http://scientificcapitalist.com Edward W. Dedelow

    I’m looking for a breakdown that cuts between the public and private sector, for example, the share of the middle income group that is composed of government workers. There are also groups that live on the larges of government. How many millionaires are dependent on government for their incomes?

    Difficult, I know, but the wealthy are often dependent on government laws and benefit greatly from them. Attorneys are a group that contributes millions to maintain their ability to make money. Red light cameras are becoming common, mostly sponsored by private businesses.

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  • Joe

    Not really. For the first 5 years or so, the rate was pretty low, but then jumped up to the 70 %, then dropped then stayed about 70% after the 30′s until the 50′s, leading right into the 60′s were this chart begins.

  • Joe

    No. It is not the aberration. Look it up before you assume. After around 1918 or so, the tax rate has been as high as the 1960′s rate, or higher (much higher). Many fortunes were made during these high tax rates.

  • Joe

    Taxes are historically low right now. What is high is inflation. However, a common laborer of the 50′s had to work 70 hours a week just to survive. Definitely not good for the family.
    As for it only effecting the very rich, that is obviously incorrect and disengenuous, and ignores one very important fact — Many fortunes of the last century were made during a tax rate of 70% for the very rich, and GDP increased.

  • Joe

    In a sense you are correct. Reagan is the perfect example of this. Though he lowered the tax rate for the highest bracket down to 28% for his last 2 years, the amount of tax taken in from the wealthiest was higher. He did this by closing loopholes, and at the time, was under attack by the conservatives for doing so. I find it funny that Reagan is the great bastion of the small government movement. He believed in small government, but realized that what government you have has to be paid for. That means taxation.
    It has always been about appropriate gov’t, not about size.

  • Joe

    The quintiles are essentially meaningless. There was no compensation for inflation, or for the various definition of tax quintiles. The top tax rate has applied to various amounts, going up and down over the last 70 years, sometimes a million, sometimes 100,000.

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  • 5052

    Interpose a stock market chart here…and instantly vanished the good old trickle down theory

  • Anonymous

    This is an excellent point. If you make the taxes ridiculous for the wealthy they will find a way to avoid them. The more ridiculous they are, the more this incentive is. Then all the money just goes to places like Bermuda, Bahamas, Switzerland etc.

    With more reasonable taxes for the wealthy, more actually gets collected.

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  • zelduh

    Can you make a chart like this, but do it AFTER TAX DEDUCTIONS ARE TAKEN???

  • zelduh

    Corporations find tax deductions to reduce their NET TAXABLE INCOME.

    A really good deduction is payroll, which is 100% deductible.

  • http://www.facebook.com/people/Josiah-Perillo/826215611 Josiah Perillo

    Yes, agree with this and the others. What is missing is a chart that shows the real taxes paid by each of these income groups.

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  • http://twitter.com/borednick985 Nicholas Anderson

    hey guys do you know any site or book that can give me the historical data of the federal reserve fund rates (AKA interest rates)? I’ve been looking for awhile and I can’t find one.

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