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NoCoPilot

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PostSubject: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 12:51 pm

Much is made, in Stiglitz and Hartmann and other recent economy books I've read, that during the Eisenhower years the "top marginal tax rate was 90%."

However, it's not often pointed out that the 90% is not ALL INCOME -- only income above $200,000 (which would be $2.5 million today).  The net tax rate, including income below $200,000 as well as above it, probably approaches the more universal rate of between 31% and 36%.  

Reagan's slashing of the top tax rate to 28% (and reclassifying capital gains to a lower rate) means that billionaires actually pay LESS tax on their top income than on their bottom -- making it advantageous to gamble in the stock market rather than invest in new plants or starting new businesses.
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_Howard
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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 2:16 pm

NoCoPilot wrote:
However, it's not often pointed out that the 90% is not ALL INCOME -- only income above $200,000 (which would be $2.5 million today).  The net tax rate, including income below $200,000 as well as above it, probably approaches the more universal rate of between 31% and 36%.

You may want to rethink this, NoCo.

Yes, in 1953, for a single person or married filing separately, the top marginal rate kicked in at $200,000 (about $1.7 million in constant 2013 dollars). But there were about two dozen brackets below that. For example, the 80% bracket kicked in at $60,000 ($516,000 in 2013 dollars) and the 34% bracket kicked in at $6,000 ($52,594 in 2013 dollars).

Hard to see how anyone who entered the top marginal bracket could wind up with an overall effective rate of 31%.
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NoCoPilot

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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 2:19 pm

I didn't do any research on it. This sort of information is not easy to come by. The math would be well beyond my feeble education.
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_Howard
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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 2:38 pm

I could run an example, but with 25 or 26 brackets to calculate, it's too much work (or I'm too lazy; take your pick). But I can give you this real life example: the last year I worked, I was in the top bracket of 39.6%. Tricky thing is that as your income reaches certain levels, you start losing deductions, so my effective marginal bracket was over 41%. The federal income tax rate for my total income was 35.98%. (And that does not include the California income tax, which was another $100,000.)


So using my example, and accounting for the large number of brackets they used to have, I don't see how anyone who hit the top marginal bracket could ever have an overall rate about 20 brackets lower.

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NoCoPilot

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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 2:44 pm

Poo.  Your pathetic devotion to reality is no match for my internet-fueled indignation.
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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 2:52 pm

Top Marginal Tax Rate Pooh_zps2d01804b
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NoCoPilot

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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 3:02 pm

It's snowing still. And freezing. However, we haven't had an earthquake lately.
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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 3:04 pm

I'm sure that has some connection to this thread, but I am missing it.
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NoCoPilot

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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 3:06 pm

How do you eat a baby bird?
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PostSubject: Re: Top Marginal Tax Rate   Top Marginal Tax Rate EmptyTue Jul 15, 2014 3:10 pm

Are you off your meds again?
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