As Americans finish yet another tax filing season, let’s take a look at the 104-year history of the income tax:
- Top Marginal Tax Bracket: Has varied from 7% (the initial rate introduce in 1913) to 94% in 1942. Of course the rate has been everywhere in between. Today this highest top marginal rate is 39.6%. The average since 1913 is 58.1%
- Bottom Marginal Tax Bracket: Has varied from 1% (the initial rate introduce in 1913) to 23% in 1942. Of course the rate has been everywhere in between. Today this lowest marginal rate is 10%. The average since 1913 is 11.6%
- Marginal Income Tax Bracket: Ranged from 1% – 7% in 1913. Today the range is 10% – 39.6%.
- Tax Code: In 1913 there were 400 pages in the code. Today there are 74,608 pages in the code.
- Standard Family Deduction: Using inflation adjusted numbers, the family standard deduction in 1913 was $98,425.45. This year you can enjoy a $12,600 standard family deduction.
- Citizens Paying Taxes: When the income tax started in 1913 the law was written because it was only to affect the top money makers. In fact, only the top 2% had to pay taxes. In other words, only 358,000 Americans had to file a 1040 in 1913. Today 148,606,578 Americans file 1040s, almost half of all Americans.
A few questions to consider:
- Given the all time average of the marginal tax brackets do you think taxes will be going up or down in the future?
- Do you want to pay those higher taxes?
- How could the government increase tax revenue without increasing the tax bracket?
- Can you protect yourself from those taxes?