Methinks the chart behind this cartoon is a bit obfuscating. Is this the Federal Income Tax? When considering all levels of taxes (property, sales, income, capital gains, death/inheritence), its possible that the tawdry 28%-39% of the last 40 years or so is a bit misleading. A person's "all-in" tax rate might be very different depending upon how it is measured and defined. If these numbers merely reflect the highest tax bracket of Federal Income Tax, then it is an oversimplification because of tax credits, exemptions, allowances and other items tucked into the Tax Code to let a person claim less gross income, lower their adjusted income, or offet taxable income (each of those is a distinct concept in the Tax Code representing at least three ways to change the number that either assigns you to a tax bracket or gets multiplied by the respective percentage).
In short: *Citation Needed* regarding the historical tax rates and what they represent.
You are correct - it is an oversimplification. It's a cartoon. My understanding is that it's meant to represent the highest marginal Federal income tax rates since the 20s.
If I'm reading your explanation correctly, it would mean that those in the highest Federal tax bracket essentially have less to worry about nowadays given the multitude of ways in which they can reduce their taxable income, no?
Maybe -- what I'm saying is that the federal income tax code is such a piece of garbled junk that it's (nearly) impossible to say what a person's "real" tax rate is or was at any point in time. For instance, in the 30's the highest bracket may have been 94%, but we don't know what else went into the calculation or definition of "taxable income". Maybe it was capped at the first $50,000 of "gross income".
I am (marginally) more familiar with the current code (amended and revised in its entirety in 1986, and amended and revised in part each year since), and know that the number by which 33% or 40% is multiplied has hundreds of different moving parts that, when combined, produce the number against you multiply 33%.
So, Obama may kick that up to 40%. Great. But that's meaningless if, with the other hand, congress and obama make it easier for people to reduce the number by which 40% is multiplied.
I have a feeling that in the 1930's there were just as many loopholes to manipulate the "taxable income" number.
Don't even get me started on the AMT. It is literally a second "hidden" tax code within the tax code.
Polticial cartoons are meant to stir the pot and get people to think about things. I like this one, but it is as misleading as it is clever.
Methinks the chart behind this cartoon is a bit obfuscating. Is this the Federal Income Tax? When considering all levels of taxes (property, sales, income, capital gains, death/inheritence), its possible that the tawdry 28%-39% of the last 40 years or so is a bit misleading. A person's "all-in" tax rate might be very different depending upon how it is measured and defined. If these numbers merely reflect the highest tax bracket of Federal Income Tax, then it is an oversimplification because of tax credits, exemptions, allowances and other items tucked into the Tax Code to let a person claim less gross income, lower their adjusted income, or offet taxable income (each of those is a distinct concept in the Tax Code representing at least three ways to change the number that either assigns you to a tax bracket or gets multiplied by the respective percentage).
ReplyDeleteIn short: *Citation Needed* regarding the historical tax rates and what they represent.
Sir,
ReplyDeleteYou are correct - it is an oversimplification. It's a cartoon. My understanding is that it's meant to represent the highest marginal Federal income tax rates since the 20s.
If I'm reading your explanation correctly, it would mean that those in the highest Federal tax bracket essentially have less to worry about nowadays given the multitude of ways in which they can reduce their taxable income, no?
Maybe -- what I'm saying is that the federal income tax code is such a piece of garbled junk that it's (nearly) impossible to say what a person's "real" tax rate is or was at any point in time. For instance, in the 30's the highest bracket may have been 94%, but we don't know what else went into the calculation or definition of "taxable income". Maybe it was capped at the first $50,000 of "gross income".
ReplyDeleteI am (marginally) more familiar with the current code (amended and revised in its entirety in 1986, and amended and revised in part each year since), and know that the number by which 33% or 40% is multiplied has hundreds of different moving parts that, when combined, produce the number against you multiply 33%.
So, Obama may kick that up to 40%. Great. But that's meaningless if, with the other hand, congress and obama make it easier for people to reduce the number by which 40% is multiplied.
I have a feeling that in the 1930's there were just as many loopholes to manipulate the "taxable income" number.
Don't even get me started on the AMT. It is literally a second "hidden" tax code within the tax code.
Polticial cartoons are meant to stir the pot and get people to think about things. I like this one, but it is as misleading as it is clever.