Tuesday, June 17, 2014

Top US Federal Marginal Tax Rates 1952–2009

The graph below shows the top US federal marginal tax rates on (1) earned income (in red) and (2) (where it diverges from the latter) ordinary income (in blue), from the the data here.


This is a large part of the story of rising US income inequality.

The major changes to the rates were as follows:
(1) from 1933 to the early 1940s the top marginal tax rate was progressively increased from about 60% to about 90% to fund the war effort, and stayed at 90% until the Kennedy–Johnson tax cut of 1964.

(2) the Kennedy–Johnson tax cut of 1964 reduced it to 70%.

(3) then under Reagan’s presidency the top marginal tax rate on ordinary income was reduced to 50% in the Economic Recovery Tax Act of 1981 and to 30% in 1988.

(4) subsequent changes have been minor, and the rate has fluctuated in a range from 30 to 40%.

3 comments:

  1. don't forget state taxes.

    ReplyDelete
  2. Very good video. Have you seen this?

    https://www.youtube.com/watch?v=q8YND_N_6ms

    ReplyDelete
    Replies
    1. Yes, that is good video. Will link to it at some stage

      Delete