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:

  1.  Given the all time average of the marginal tax brackets do you think taxes will be going up or down in the future?
  2.  Do you want to pay those higher taxes?
  3. How could the government increase tax revenue without increasing the tax bracket?
  4. Can you protect yourself from those taxes?

 

 

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