Sunday, December 25, 2011

As the Population Doubled, Tax Rates have Declined

Since the Bush Tax cuts and two wars, and then later with the economic collapse in 2008, we've had mass unemployment and lower property values. So it's no wonder we now have a budget crisis and a revenue problem, but not necessarily a "spending problem".

Today we have some of the lowest tax rates in U.S. history, yet the Republicans and Tea Party have kept falsely claiming otherwise, saying we are over-taxed...when just the opposite is true. (Historical Tax Rates on the Rich from 1862 to 2011)

More people (with a natural population growth) makes for "bigger government", and why a fair balance of taxation and necessary domestic spending is needed to maintain programs like Social Security and Medicare, while maintaining what's necessary for the defense of the country. But it's in the defense industry where we have the most fraud, corruption and waste.

However, while government (people) continues to grow, corporate tax rates, the capital gains tax rates, and the top income tax rates have been steadily in decline for decades.

But rather than raise the tax rates, or cut anything in defense spending, the Republicans want to cut and privatize programs that we paid all our lives into, such as Social Security and Medicare.

If we just taxed people on their annuities, trust funds, gifts, dividends, estates (generation-skipping), and capital gains on stock trades as REGULAR INCOME according their top marginal federal income tax brackets, wouldn't that be fair? (How the 1% bilks the 99%)

Because of the many loopholes in the U.S. tax code, on average, the largest U.S. multi-national corporations and banks already pay a lower effective tax rate in corporate taxes (14% to 18%) than they would in China (25%). It's not over-regulation or taxes that keeps businesses from hiring, they just don't have to.

And shouldn't we tax Kim Kardashian and Paris Hilton their fair share? (Gift Taxes on the Fabulously Rich)

In 1950 we had a population of 152,271,417 with a top corporate tax rate rising to 52%. The top marginal rate for income was 91% and capital gains was taxed at 25%. (Tax rates during the Fabulous Fifties)

In 1977 capital gains on stocks (etc) was taxed at 49% (Historical Tax Rates on the Rich from 1862 to 2011), now it's only 15%.

Today in 2011 we have a population of 312,827,260 (double from 60 years ago). Corporations are paying an average "effective" tax rate of less than half they than did in 1950. (Low Wages Kills Jobs, Not High Taxes).

Historical Corporate Tax Rates:
From 1969
(the highest) to the Present (near lowest)
Year/s Tax Rate
1969 52.8%
1970 49.2%
1971 - 1978 48%
1979 - 1986 46%
1987 40%
1988 - 1992 34%
1993 - 2011 35%

Currently the top marginal rate for "regular" income is 35% (before deductions) and capital gains is taxed historically low at 15% (Capital gains is where the top 1% earns most of their income).

The GOP and Tea Party wants "smaller government". Do they mean they want less people?

Year U.S. Population (Size of government)

Tax Rates

(Not including estate and gift tax rates)

1913 97,225,000 The Revenue Act of 1913 - The Tariff Act imposed the federal income tax following the ratification of the Sixteenth Amendment. Less than 1% of the population paid federal income tax at the time. From 1913 to 1921 capital gains were taxed as ordinary income until 1922.
1922 110,049,000 The top marginal rate on individuals fell from 73 to 58% by 1922, but preferential treatment for capital gains was introduced at a rate of 12.5 percent (and was never this low again until the Bust tax cuts in 2003).
1950 152,271,417 The Revenue Act of 1950 increased the top corporate rate to 45%. The Korean War induced Congress to re-impose an excess profits tax, effective from July 1950 to December 1953. The tax rate was 30% of excess profits with the top corporate tax rate rising to 47%, then later to 52%. Top marginal was 91% and capital gains was 25%
1964 191,888,791 The Revenue Act of 1964 - Reduced top marginal rate from 91% to 70%, reduced corporate tax rate from 52% to 48%.
1978 222,584,545 The Revenue Act of 1978 reduced individual income taxes, reducing corporate tax rates (the top rate falling from 48% to 46%), effectively reducing the rate of taxation on realized capital gains to 28%.



The Tax Reform Act of 1986 - The top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15%. Capital gains rates were 28%.
1997 267,743,595 The Taxpayer Relief Act of 1997 - The top capital gains rate fell from 28% to 20%.
2011 312,827, 260 George W. Bush tax cuts since 2001 and 2003 - The top corporate and top marginal tax rate is now 35%. Capital gains is only a mere15%.

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