Tax Burdens

June 3, 2012 — 2 Comments


Think your paying a lot in taxes? A lot is relative to prior tax burdens, as demonstrated by this graphic. It charts relative tax burdens from 1913 onward, sized and colored by the tax burden: the amount of tax due relative to the long-term average at each income level. Above-average burdens appear thick and red and below-average thin and blue. The data has been adjusted for inflation, but excludes OASDI (social Security, Medicare), and other taxes(real estate, sales, etc.)The underlying data comes from The Tax Foundation, IRS, and Bureau of Labor Statistics.

The graph shows a series of tax regimes, with low taxes into 1940’s, an increase during World War II, remaining high through the Korean war, and easing in the mid ’60s. From there, they held steady, until President Carter emancipated poverty-level wagemakers with his tax-free under-$8000 bracket, creating the blue wedge in the graph. Three years later, Reagan entered office and began turning the tables, finishing in 1988 with his retrograde 28% upper rate. The rich were now on tax vacation, at the expense of the poor and middle class.

A modified Reagan-era tax system lingers to this day. To his credit, he did reduce taxes on very low earners, so they’re no longer getting hammered. But, the people at our economy’s core – the full-time workers earning between $20,000 and $150,000 a year – still pay at up to double the rate of the ultra-wealthy, relative to what history suggests they should. Just ask Mitt Romney.

Trackbacks and Pingbacks:

  1. Adjust Your Tax Withholdings to Control Your Refunds | The Joy of Tax Law - June 5, 2012

    […] The stress of filing taxes before the deadline in April has come and gone. But were you surprised at how much you got back and did it leave you wondering if you wound up paying additional taxes instead of getting a refund? […]


  2. Tax Burdens | The Joy of Tax Law | Tax Attorney - June 3, 2012

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