Here is a sneak peek at my An Illustrated Guide to Income in the United States. These are a set of data graphics looking at the average income and change in number of jobs over the last ten years for 800+ occupation by industry and by education. Be sure to sign up to be notified when the Income Guide is done.

Data from EMSI

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Due to popular demand, I have updated my 2010 graph on top marginal tax rates. In addition, during this year’s tax season, I will be selling copies of my Top Marginal Tax Rates graph as a tabloid size 11″x17″ poster.  

FYI, 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.

Tax Data: Married filing jointly, Capital Gains & Regular, Historical Corporate, Corporate Tax Schedule (page 16) pdf

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This one of the graphics that I presented recently at The Big Picture conference here in New York City. It is from a project I am currently working on called An Illustrated Guide to Income in the United States: a collection of infographics, maps and charts looking at the different incomes and occupations in the United States.

Recently the conversation in the news has been about the top 1%, however, in this graphic I show the breakdown of personal income by different percentiles, including the top 0.01% (i.e. income above $9 million). I have used 10,000 “people” to represent the tax returns filed in 2008, each “person” one equals 15,246 tax units. (A tax unit is single adult or married couple living together, including their dependents.)

So the top 1% are represented by the 100 “people” in the four (orange, yellow, magenta & red) rectangles the upper left corner.

Approximately $8.2 trillion in personal income (including capital gains) was reported to the IRS in 2008. Divide that by 152 million tax units you get an average income of $54,315. I have the size of the “people” represent the average income for each percentile group. For example the Average Income for the Top 0.01% = $27 million.

Data is from Saez and Piketty research which is now available at the The World Top Incomes Database 

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This is the second map that I created with my urban geographer brother Matthew Mulbrandon on the Housing Price Index (HPI). A description of these maps as well as the first set can be found on Design & Geography. This new set is inflation adjusted and covers the entire span of the Federal Housing data set 1991-2010.

Data source: Federal Housing Finance Agency

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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

Reminder: April 30th is the last day you can pledge to my project:
An Illustrated Guide to Income in the United States @ Kickstarter

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

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A federal income tax was imposed on several occasions in the 1800s. However, in response to a court case which determined that income from property was required to be imposed in proportion to states’ population, Congress proposed the Sixteenth Amendment. Thus in 1913, the modern income tax system was born.

In 1913, 358,000 returns were filed which was 2% of all households. While the top tax rate was 7% on incomes above $500,000 ($10.9 million in 2010 dollars), the first $3,000 ($65,331 in 2010 dollars) was exempt from the the income tax for single persons.

In 1918, 4,425,000 returns were filed which was 20% of households. Now the exemption was $1,000 ($14,352 in 2010 dollars) while the top rate of 77% was now applied on income over $1,000,000 to pay for World War I ($14.3 million in 2010 dollars). There was high inflation during and right after the war so by the peak in 1923 almost 40% of households were being taxed due to bracket creep. This was fixed in 1925.

In 1942, 36,619,000 returns were filed and the exemption had been dropped to $500 for single persons ($6,613 in 2010 dollars). For the first time the number of income tax returns filed exceeded the number of households.

Data: Top Income Tax Rates; Tax Exemptions; Number of Tax Returns; Number of Households

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Our homes have changed over the last 70 years, including homes size, building technology, family size, and a rise in standard of living. As people’s income increased over the 20th century they bought bigger and better homes. This caused the median home value to go up even when taking into account the effect of inflation. For example a full bath cost a lot since you need double plumbing for hot and cold water while a flush toilet needs a home connected to a sewer system or septic tank. In addition, housing costs include both land and the house; where building space in limited (i.e. cities) land will increase in value with population growth.

Median home value calculated by the U.S. Census factors in all of these changes and covers the housing markets in both rural and urban areas. While the historical price index created by Robert Shiller looks at home prices as an investment (like stocks) focusing on the resale prices of a subset of the standard, unchanged houses in large metro areas.

Data Source for Housing Price Index from Robert Shiller’s Irrational Exuberance
Median Home Values: Historical Census of Housing Tables Home Values; ”An Approach for Calculating Reliable State and National House Price Statistics”
Characteristics: Housing Characteristics In The U.S.; Median and Average Square Feet of Floor Area

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A $10,000 house in 1890 would be worth almost the same in real dollars in 2010 but more than $350,000 in nominal dollars in 2010. Which matters to the home seller, real or nominal prices? If a seller is holding a mortgage then the question is: Can I sell for more or less than I owe? Since that loan amount is not adjusted for inflation then the nominal value is more importent both the seller and the mortgage holder. It is when nominal prices fall that banks have trouble with high rates of mortgage defaults. But if you are looking at the long-term value of real estate as an investment (compared to stocks or bonds) then you need to take into account the real growth.

Data Source for Housing Price Index from Robert Shiller’s Irrational Exuberance

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Comparing Real GDP per Capita growth to the real growth in S&P Composite (price only). However, the stock price series is adjusted for inflation using CPI-U while the GDP per Capita (from MesuringWorth.com) is adjusted with the GDP Deflator.

Annualized growth rate of since 1871:
Real GDP per Capita = 2.0%
Real stock price return = 1.9%
compared to
Real total return with dividends reinvested = 6.2%

Data from MeasuringWorth.com and IrrationalExuberance.com

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New graph I created looking at long-term growth of US GDP per capita, very similar to my earlier graph of US GDP. Will post log version later this week.

Data from MeasuringWorth.com

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