Sunday, July 08, 2012

Comparison of Tax Rates, 1967 and 2011

According to memory, my father was making around $10,000 salary in his job at Bell Aerospace in 1967.  I might be totally off in that recollection, but that year I was making 75¢ an hour working on a nearby farm, so ten grand would have been a goodly sum of money at the time.
Using the BLS's CPI Inflation Calculator, that salary today would be $68,800.
Let's compare tax rates for my Dad making $10,000 a year and someone making the corresponding $68,800 a year in 2011.
Using the Tax Foundation's Federal Income Tax Brackets 1913-2011, I can create the following simple table.

Marginal Tax Rate
$8,000 - $12,000
$17,000 - $69,000

So, if I were making the equivalent amount of money as my father was making 45 years ago, I would be paying a marginal tax rate 32% lower than what he was paying ((22-15)/22).
For the purposes of this thought experiment, I make the convenient assumption that this dollar is net.  I will make the observation that tax payers in 1967 had many more deductions available (e.g., credit card interest) than are available today.
The fundamental point is that taxpayers who are falling in the center of the curve ("Neither the tip of fortune's cap/ Nor the soles of her shoes") are paying a significantly smaller percentage of income for Federal tax today than they would have been paying for equivalent income 45 years ago.
TEA Party?  Too much whine with the cheese.

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