You think taxes are bad now? Some economists have outright called that notion “nuts.” Put things in historical perspective and you’ll see why. In 2009, according to the Bureau of Economic Analysis, Americans forked over an average of 9.2% of their income to Uncle Sam in the form of federal, state and local taxes. In 1945, Americans paid anywhere from an average of 24% (for those in the lowest tax bracket) to a whopping 94% (those in the highest). Then again, in 1915, average tax rates ranged from a measly 1% to 7%. All told, the consensus among economists is that, given the current budgetary deficits both on a federal and local level, today’s low tax rates shouldn’t be expected to last long.
In our latest infographic, we look back at average taxation rates in the past 95 years.
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13 Comments so far
leave a commentIsn’t Y scale quite a bit off chart?
This graphic is misleading in a number of ways. It doesn’t take into consideration important things like allowable deductions which affects greatly what people actualy pay. One of the keys to the Reagan reduction in rates was the elimination of many these “loopholes”. Another issue this graphic leaves out is where the “three” brackets kick in. And what about all the people who don’t pay income taxes at all? That cut off has changed dramatically over time.
That is a bad way to measure how much taxes paid. The problem is that the percentage of people who either do not pay or actually get money back is almost 50%- the largest percentage of those years. So all the middle class (and mostly rich people) pay it. I currently pay about 40% in taxes (federal, state, and local). That IS a lot of money. Taxes ARE high.
Now the idea that rich people are skirting the system is what is absurd. The top 1% pay around 40%, top 5% pay around 60% of all taxes, the top 10% pay around 71%, and the top 50% (more than $32,000) pay around 97%. And those percentages keep going up.
So that graph is very misleading. Averaging out all payers is crazy.
while the graph is pretty … the y axis doesn’t align with the plots and data points given
First of all, the data is completely inaccurate. With that said, looking only at the graph, notice FDR (the father of American Socialism) had the highest taxes rate. Michael is disillutional to think our taxes are not high at the moment unless he is a Socialist. What I would like to see is the tax rate in the future if the Obama administration agenda passes. How will Cap and Trade, ObamaCare, ending Bush’s tax cuts, etc. affect the American people?
This is just silly.
Not that an economist from CAP is against tax cuts and for tax hikes–they sincerely, if in my opinion mistakenly, believe that the government is just that much better at spending your money effectively than you are. If they were right, then indeed the larger a share of national income is spent by the government– rather than by you, me, and other individuals and families–the better.
But the rest of the article and the chart is just silly, comparing apples to oranges, and using the wrong terms to boot.
First, the total amount raised by taxes at all levels of government is nowhere near 8 or 9% and hasn’t been for almost a century. In 2010, total government revenues are expected $4.6 trillion, out of a GDP of about $15 trillion, or about 31%. The only way to get anywhere close to 8% or 9% is by ONLY talking about income taxes (about a third of the total tax byte).
So the graph is just plain wrong claiming that this figure includes all other taxes.
Federal Social Security and Medicare taxes ALONE, which apply to almost every single dollar earned by most people, are about 15%.
Second, the tax rates quoted in the graph and text are obviously the *marginal*rates* for various brackets. So contrary to the graph, they are not the average rates for anybody. When the text repeatedly claims that they are “average” rates, this is just plain wrong. If you do not know the difference between average and marginal rates, don’t write about tax policy.
Third, looking merely at marginal rates in various brackets is not terribly meaningful without information what fraction of the population reaches each of these marginal rates. For example, a 100% marginal tax rate for income above $100 billion would be completely meaningless as nobody would pay it. Similarly, a 1% tax bracket which applies only to the first $100 of income would be paid by everybody but on such a small amount that it is equally meaningless.
One could go on, but ars longa, vita brevis.
But if you want an accurate idea about how much the government taxes and spends, have a look at this graph: http://en.wikipedia.org/wiki/File:Us_gov_spending_history_1902_2010.png . It is not as pretty, but has the advantage of being accurate and based on meaningful numbers. In short, government expenditure and taxation as share of the economy has been on a steady upward trajectory for the past century and is setting new peacetime records every year.
And that is even before the Obama tax hikes kick in in 2011.
This is an example of a saying I heard a while back … “Liars figure, and figures lie”. I assure you that I pay far more than 9.2% of my income in taxes. And I’m square in the middle of the middle class. There may be a mathematical way to come up with that percentage, but it doesn’t represent reality for any Americans that I know.
I am disappointed that MINT would allow dishonest figures like this to be posted on their blog. It hurts their credibility.
From Mint.com blog post: “…today’s low tax rates shouldn’t be expected to last long.”
The idea that raising tax rates increases government tax revenue is quite silly.
Taxes are penalties. If your tax rate was 99%, you wouldn’t do your job because it wouldn’t be worth it, so the government would get less income by raising taxes too high. At the same time, the government wouldn’t make much if the tax rate was just 1%. Somewhere in between there’s a rate where a given group at a given time will provide the most tax revenue.
Lowering taxes may well (as proven by JFK’s, Reagan’s and even W’s tax cuts) raise revenue, as it incentives work and investment (instead of penalizing it).
The problem is that the politicians increase spending so they still increase the deficit even though the government makes more money.
I can’t say whether or not the charts or the data is true, but wasn’t the pricing scale quite a bit different back in 1945? My grandpa is always telling me how cheap everyday things like gas and food were.
I can’t speak for everyone else, but I know I pay the government plenty of money each quarter (something close to about 30-35%). As time goes on, the government has been getting worse and worse and managing the budget. In my opinion, they’re fired!
I, too, have to say that I’m very disappointed in Mint. A terribly poor way to present this data. And you’re really going to quote someone from the “Liberal Center for American Progress” on whether taxes are too high?
Yeah, I gotta say, you guys really whiffed on this one. The appropriate level of taxation is bound to stir up a debate anyway but this graph doesn’t illuminate the issue at all. For one thing, I don’t see what you counting as “taxes.” Is this personal income taxes? state and local? sales? excise? There has been a multiplication of these taxes over the years and you really have to consider the “total tax burden.” I know that even some hard core lefties who think we should abolish the corporate income tax because they know that that is just passed on to the consumer anyway. (They’d rather tax windfall profits, unearned income or regulate salaries or something else to get at the rich folks). Even illegal aliens who pay no income tax pay sales tax. This is a complicated issue, one that is hard to crack in a single graph, in fact, it would be more interesting for you to present a series of graphs that show the impact of taxes, in different states, for example. And there is the whole question of marginal tax rates that somebody above raised. That’s more about discouraging people from working harder and being more productive (or hiring better attorneys and tax accountants to shelter income and increase deductions) lest they fall into a higher bracket. Left and right tend to focus on different things when it comes to taxes. It would be more interesting to illustrate and discuss those differences rather than presenting only one side of the argument. Both sides have valid points and there will have to be a compromise eventually.
Did quicken write this with the info from my tax return? I think not, and this is strike one for mint.
Average of everyone or every income tax payer? I’m well over this average of 9.2% of my income going to local, state, and federal government. I don’t think I’m really outside the range of middle class either. Tax withheld on my paycheck alone, it’s much higher than 9.2%. I get back a bit from mortgage interest, but not a significant amount compared to what I pay in just federal income tax.
Moreover, what is the point of this infographic? Is the point that we shouldn’t be mad that the government is stealing from us? Don’t complain, we don’t have grounds or basis? I just don’t get it. Let’s pull this one down and start again.
alright….well, that statistic about 1945 is totally bogus….considering the obvious fact that World War 2 was just wrapping up….retards