Top Marginal Tax Rates 1916-2010

See the Updated Version for 2011 here.

Green line is the top marginal rate for married couples filing jointly (most years dividends were tax like ordinary income until 2003), orange is the top rate for income from capital gains. The top corporate tax rate is included for comparison. Your marginal tax rate is the rate you pay on the “last dollar” you earn; but when you view the taxes you paid as a percentage of your income, your effective tax rate is less than your marginal rate, especially after you take into account the deductions and exemptions, i.e. income that is not subject to any tax.

Over the years, changing the amount of taxes people pay was accomplished not just by changing rates but by changing the income limits of the tax brackets. Just looking at the top rates does not give the whole picture about who is paying taxes. Before the 1986 tax reform, the income tax had 15 brackets. In the 1930s, there were more than 50. The Wealth Tax Act of 1935, applied the top rate to income over $5 million and had only a single taxpayer: John D. Rockefeller, Jr. As the number of tax brackets decrease, the the top rate was applied to more people over the decades. Since 1987 the income tax brackets were combined so now more than a million people “qualify” for the top marginal rate. If you are interested here is the first 1040 form for 1913.

Tax Data: Married filing jointly, Capital Gains & Regular, Corporate

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Addendum: Rolled-back the 2009/2010 capital gains marginal rate to 15%

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Tagged as: Line Graph, Tax Rates, United States

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Anonymous

Discussion of marginal tax rates without recognizing that what is deductible keeps changing is at best ignorant or at worse malicious.
http://www.facebook.com/people/Daniel-Steward/100000796437067 Daniel Steward

I agree this is really not good for the country.
J J

I remember there is a “hedge fund loophole,” I think, where the long term capital gains rate (hold a security for more than one year) can apply to trading, which yes, I agree, is unfair for other investors. But remember, if you trade, you trade in the normal income tax brackets, depending on the state, it can reach 50%! The other reason for a lower long term capital gains tax rate is that there is already a “corporate income tax” anyway!

Remember, there is NO “corporation” to be taxed, only shareholders, customers, and the effect of less workers “pay” this tax!
http://www.facebook.com/duncan.bates.alabama Duncan Bates

most of the super wealthy elite park their money in tax exempt foundations and do not even pay any taxes. The people who end up paying the capital gains taxes as well as the rest of the taxes are the average investor who make up the 99.9%. Mr. Buffett and Gates and the other elite who buddy up to government do not pay taxes because of this.
J J

Yeah, but most of those people paid the original income on either the standard income tax, or if they invested and traded, the short term capital gains tax, which is the same as the income tax. Sure later on, they could use current wealth to deduct taxes for current income NOW, but it’s not like they paid no taxes!
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http://twitter.com/rjmils31 Robert Miller

Capitol gains should be even lower. It’s money that’s already been taxed but the Government can’t keep their criminal hands off of it so they tax it again.
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