U.S. federal individual income tax rates history, 1913-2011

So this is what I was doing with all of that graphing. I guess some people might find this useful. I found the information interesting.

U.S. federal individual income taxation 1913-2011

A more interesting summary graph is on Wikipedia: Historical tax rates for the highest and lowest income earners.

Notes, sources and caveats

Data is from the Tax Foundation's page U.S. Federal Individual Income Tax Rates History, 1913-2011, which supplied the raw data in MS Excel format.

From 1913 all individuals filed singly. A second filing status for married couples filing jointly appeared in 1949. A third filing status for Head of Household appeared in 1952. A fourth filing status for married couples filing separately appeared in 1971. All four statuses are plotted on all graphs, thanks to a little copying and pasting in the spreadsheet.

The information was then dumped into a text file, and parsed and graphed using Perl.

Almost every year of taxation came with its caveats and special notes, which are listed in the original Tax Foundation data but ignored for the purposes of these graphs due to the extra one-off coding that would have been required. As such, these graphs should be taken to show not absolute truth but only rough trends, and possibly not even that.

The cut-off point for these graphs was USD 250,000. This number was chosen more or less arbitrarily, as a balance between showing behaviour as income tends towards infinity, and still leaving behaviour in the lowest brackets visible. In 2011, tax brackets exist up to more than a third of a million dollars (i.e. off the scale to the right), and historically the largest tax bracket started at USD 5,000,000 (1936 to 1941). Using the supplied Perl, you can modify $maxmoney to recalculate the graphs for any upper limit you wish.

Observations

Income taxation was nominal-shading-to-non-existent until 1917.

Income taxation peaked in 1944 when the U.S. was at the ATM with less than $20 in checking and needed to pay for World War II.

Married people get substantial breaks, as long as they file jointly; married people filing separately are actually punished financially for doing so, compared to e.g. separating and filing singly. However, the differences in absolute terms are smaller now than they were when these new filing statuses were first introduced. In the the late 1980s the differences were negligible in absolute terms.

As seen on Wikipedia, federal individual income taxation rates for the highest earners have rarely been lower than they are in 2011 and are on a downward trend.

There is a concept called the Laffer curve which expresses a relationship between the flat income tax rate and the total income tax collected by the taxing government. A situation with a flat income tax rate would appear on these charts as a single diagonal line with no bracket threshold, meaning the Laffer curve model is very simple. In truth, income tax rate can be a much more complex function of income rather than a simple percentage, even restricting oneself to the piecewise linear, strictly increasing functions seen here. The phase space is not one-dimensional, and optimal taxation curves might be very strange-looking indeed.

Finally, if I may be naïve and sophomoric for a moment, there is no taxation rate below 100% at which people stop wanting more money.

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