From Visualizing Economics, we see this spectacular depiction of the top Marginal Tax Rates in the US, from 1916-2010, for Personal Income, Corporate, and Capital Gains tax rates:


click for larger version

Ginormous version here

Category: Digital Media, Taxes and Policy

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27 Responses to “US Tax Rates, 1916-2010”

  1. TheArmoTrader says:

    I dont know how someone can take a look at that graphic and seriously say we dont have a revenue problem. We are currently at all-time lows for ratio of Revenue:GDP …..And on top of that they say we need to cut more taxes in order to increase revenue!!!!! I didnt know magic was real!!!!!!!!!


  2. VennData says:

    And then there are those increases in Social Security, business, and energy taxes Reagan dumped on working people to make up for it…

  3. Kralizec says:

    Well, among other things perhaps, the chart seems to suggest that the rising tax revenues of the last few decades came either despite or because of generally falling tax rates. The rising tax revenues were, in any case, not the result of rising tax rates.

  4. franklin411 says:

    So it looks to me as if cutting taxes for the rich does, in fact, provide a kind of prosperity.

    From 1929-1932, they called massive unemployment and extreme poverty amongst the general public “Hoover Prosperity.”

    That’s the same kind of “prosperity” we’re enjoying as a result of Republican tax policy.

  5. fugazzi says:

    Kralizec, you might want to consider the idea that things tend to work around “equilibrium”, and that if a bit of a good thing is good, a lot of if might not be…said differently, taking the top marginal rate down from 70% to 50% may have been a good thing, but it may not be true from 50% to 30%…as for the rising tax revenues, you might want to consider what impact rates going from 15% to 0% have on economic activity, and therefore, on tax revenues…and realize that now, rates can only go up, be it in a year or 5 or 10 (depending on your economic scenario, japan, zimbabwe, whatever…) which will lower the potential growth rate of the economy, thus of the tax revenues…

  6. Kralizec says:

    As for our having a revenue problem, as TheArmoTrader says, it doesn’t seem unreasonable to expect the “federal” government to get by on revenue of 2.2 thousand thousand million dollars until next year’s 2.2 thousand thousand million comes in. It seems the states and cities have their own parts to play, provided the “federal” government leaves revenues for them.

    On the matter of corporate taxes in particular, it seems the Americans would not face the loss of their corporations to other countries, “on paper” or otherwise, if they set their corporate tax rates at a level similar to that of the countries to which corporations are in one way or another shifting their operations, revenues, and profits. In any case, it seems good to be gentle with one’s businesses, lest one harm one’s fellow workers and investors. I trust any proposals made here will be good for, not injurious to, the companies whose stocks and bonds line the Americans’ pensions and other investment accounts. Actually, I don’t trust that, as I’m aware of the extent to which righteous indignation makes one forgetful of the good.

  7. Theravadin says:

    This chart looks like good evidence that lower taxes are not a necessary condition (perhaps not even a condition at all) for prosperity. Look at the tax rates during the 50s and 60s. It also pays to remember that the one place where money is least likely to create a bubble is in the hands of the government.

  8. franklin411 says:

    Yup. The whole idea of progressive taxation was that capitalism thrives when average people have real opportunities to compete. Taxes were essentially zero between the fall of Rome around 450 AD and the age of exploration/Enlightenment around 1700 AD. That was also one of the least productive periods in world economic history. Low/zero tax rates concentrated capital in the hands of those who obtained it first, and these people had no incentive to risk their capital on innovation. If you’re top dog, why risk a penny of your capital on some new, unproven technology?

    Progressive taxation is designed to give people enough incentive to try to get rich, but also to give them access to the capital necessary to do so through innovation. And it’s also designed to fund free and open access to the tools–education, infrastructure, scientific research–needed for real competition.

    When you think about it, conservatism is anti-capitalistic. Conservatism is based on the idea that people have roles in society (often God-given), and it’s wrong for people to try to escape these roles. Monarchy and Fascism are conservative ideologies, after all. Liberalism is very capitalistic–based on the idea that all men are created equal, and that they ought to have an equal opportunity to compete in free markets of various kinds–intellectual as well as economic.

  9. Kralizec says:

    And fugazzi, I know of the importance of taking a path between extremes, but in general, I agree we do well to remind each other. I’m wary, then, of imposing rising tax rates in a period in which you and I both think it is reasonable already to expect interest rates to rise.

    Continuing in regard to the broad problem, if I recall correctly, the Americans’ “federal” revenues are running at a level equal to the total expenditures in fiscal 2006. It’s possible I have the wrong year. In any case, it seems it would be good for the Americans to come to live within their means by making some intelligent adaptation of the “federal” budget from some recent fiscal year. And it just seems every truly federal purpose, and much more besides, could be served on annual revenues of, I believe, $2.2 thousand thousand million, until the next $2.2 thousand thousand million comes in.

  10. bullfrog says:

    Is there a chart graphing actual tax rates paid by corporations on the same scale? I suspect a wide, and widening gap.

  11. fugazzi says:

    Kralizec, nothing wrong with living within one’s means i’m all for it…tell me where you would cut 1.5 trillion dollars?

  12. RadioFlyer says:

    Interesting chart, but would be much more useful if it added total annual federal income, expenses and maybe GDP on the right axis. Putting those vertical gray recession bars in would be nice as well….

    Some kind of “standard of living index” for the bottom 20-25% income earners along the bottom would be cool too.

  13. rootless says:


    Liberalism is very capitalistic–based on the idea that all men are created equal, and that they ought to have an equal opportunity to compete in free markets of various kinds–intellectual as well as economic.

    This sounds good. And now about the question whether real capitalism can fulfill the promises of liberalism.

    Another question, what about those people in liberalist utopia who fall in the left part in the distribution of those requirements needed to be successful in competing in the markets. Because it’s not true that all humans are created “equal” with respect to those requirements. They are defined to be equal in “dignity” and “rights” (Universal declaration of human rights). That’s it.

  14. fugazzi says:

    Kralisec, it’s not that i’m in favor of high taxes…but, as i made the argument in a post yesterday, the simple fact that the average worker’s compensation is flat after inflation over the last 30 years, compared to a very nice increase in the top categories shows that all the vaunted “productivity gains” of the last 30 years, have gone to “capital’…rich people, corporations…the pendulum as just swung too far…the graph of the tax rate over time reinforce that view…it has lead to very unequal growth, to the point where it is a problem…
    You just can’t have a great country without having a strong middle’s that simple…and it’s just not the case anymore in america (70.9% of the wealth si owned by the top 10%, 38% by the top 1%…the bottom 40% owns 0.2%)…so the choice we are faced with is reducing government expenditure, which will hurt first and foremost the bottom 50% of the population (if not the bottom 90%), that just doesn’t need it at this point, whereas raising taxes intelligently will hit those who have benefited most of the last 30 years’ “properity”…it’s a choice of going further along the path of the last 30 years, or coming back a bit…
    And when i say “intelligently”, what i mean is “rich” and “corporations” are not created equal…small and medium businesses create jobs here, invest here, innovate here and do not have access to the loop-holes the mega corp have…may be lowering their tax rate would be a good idea…not so much in my view for the big ones…Same for the concept of rich…notwithstanding what some insisted upon yesterday, at 250k$ a year you are not rich…chances are you are a small business owner, or a high end employee in the few industries that provide that kind of pay…if you’re a small business owner, it’s not a good idea to tax you more, for the reasons i explained just above…if you’re an employee, chances are you live in a high cost of living area, so what’s left after that and taxes is just enough to put aside some money for a down payment, college for the kids, retirement, a rainy day fund…that’s good…but that’s not being rich…that should be considered middle to upper middle class…the difference with the guys who make millions is many order of magnitude…i perfectly realize that one’s position on that issue is probably tainted by where one sit, but still, it should be easy to realize that there are more differences between lloyd blankfeind and David T, the medium size business owner who was posting yesterday, than between him and the average worker…in my view, you taxing David T more will be detrimental to the health of the country, taxing Lloyd more not so much…

  15. expolitico says:

    What I see in the chart is that during periods of real growth (as differentiated from psuedo growth) both corporate and individual rates were higher than today’s rates. Look at the period from 1950-1988 as an example.

    To me this means that the economy can flourish and government can have adequate funds at the same time and that higher rates don’t hinder development.

    What the current picture shows is that government is lacking tax revenues to sustain itself, hence the need to cut things OR change the metrics, raise taxes AND clean house without destroying the structure.

  16. DL says:

    Let’s not forget, however, Hauser’s Law.

  17. Here are some counter arguments

    Fed govt spending % of GDP 1790-1930 vs 2010

    Fed tax revenue and marginal rates

  18. Livermore Shimervore says:

    interesting. Back when we were at one time a creditor nation (pre-Reagan) our debts were obviously low and those rates were high and even during Jimmy Carter years we were creating one million jobs per year.
    Now over the last decade we have had the lowest taxes across the board since FDR, our debts have reached unthinkable heights and we went from 1-3 million jobs per year (every year) in the 70, 80s and 90s to zero million jobs per year.

    This is the big problem with supply side voodoo economics. Government will spend the tax savings and then some. Soaring campaign contributions from corporations demand it since that spending ultimately ends back up in their pockets via the consumer.

  19. pmorrisonfl says:

    At a quick glance it looks like the last time taxes were this low we had a depression.

  20. carpediem0496 says:

    The linear thinking from the “tax the crap out of ‘em” crowd is amazing.

    There is a lot more going on than just marginal rates. Tax brackets, the AMT (which causes many to pay taxes on taxes which are excluded deductions), thousands of pages of tax code, foreign tax jurisdictions and more.

    Thank goodness BR took a second to add a couple of links in an effort to broaden the discussion.

    The deficit is a function of spending under an ever expansive government driven by the “economically ignorant” non-constitutional ideas of the progressive left (my opinion) who push collectivsim over personal freedom and responsibility but expect the responsible and productive to pay for the irresponsible, weak or afflicted as defined by them.

    A flat tax or a fair tax would be the best change on the revenue side. Everyone should have skin in the game and what you pay should be a function of how good are your lawyers and accountants.

  21. Arequipa01 says:

    “The deficit is a function of spending under an ever expansive government driven by the “economically ignorant” non-constitutional ideas of the progressive left (my opinion) who push collectivsim over personal freedom and responsibility but expect the responsible and productive to pay for the irresponsible, weak or afflicted as defined by them. ” You are a genius. If only we had understood this sooner, we wouldn’t be living in this Gulag under Commissar Kucinich.

    Tell me about Billy Tauzin’s political affiliation (how’s he just a big ole commie) and the name at the bottom of Tauzin’s bill.

    Then we can discuss the $548.9 billion requested in FY 2011 for the military budget (conveniently leaves out Iraq and Afghanistan). G_ddamned collectivists fightin’ fur R freedum.

    Howsa’ bout you explain how it is that health insurers are afforded exemption from the antitrust legislation? All those effin hippies in the board room, getting high and plotting to make us all wear Che Guevara t-shirts and learn how to knit things out of hemp.

  22. socaljoe says:

    My assumption is that taxes, like interest rates, are in the process of reversing a 30 year down trend.

  23. DeDude says:

    So it all the way back in 1921 they got the idea that sitting on your fat lazy ass(ets) and making money by rent seeking (capital gains) should be taxed less than making an income by honest work. No wonder we have turned ourselves into a decaying society where little is made and 1/3 of the economy consist of finding new ways to cheat money away from others.

  24. sabre_jenn says:

    This chart is meaningless unless you also factor in deductions. Rampant deductions are what allowed GE to avoid taxes in FY2010. Officially, GE’s statutory corporate tax rate for 2010 was 35%, very different from the zero (actually negative) rate they paid. This chart of historical statutory rates is absolutely meaningless.

    The statutory rate was higher in the middle of last century, but deductions were also much higher. The effective tax rate for the **AVERAGE** company is close to unchanged. The effective rate for companies that have bought members of Congress and had special tax deductions written into law (GE, Goldman, etc) is much lower.

    If you want to draw any meaningful conclusions, rather than political propaganda, you would need to look at EFFECTIVE tax rates. That is the number that people actually pay

    I really expected better analysis from someone of Ritzholtz’s stature. If people like him can’t have an intelligent debate, its no wonder the country is a mess

  25. gman says:

    There is some validity to Hausers Law and the Laffer Curve. But in the case of Hausers Law the range is 14-20% of GDP regardless of tax rates..we have been running on the lower end of the range since the Bush taxs cuts. The inflection point on the Laffer curve is 50-70% so ANY way you slice it, small tax hikes on the winners (like me) of the past decade are rational and necessary to ensure the viability and legitimacy of whole god damn system! Cmon! 2-4 wars and bad demographics and taxes by any metric at 70 year lows..It is an obvious policy adjustment!

  26. [...] on The Big Picture blog. Corporate Tax Rates, Then and Now | The Big Picture. Tweet This Post Tags: deficits, GOP, [...]

  27. BNW says:

    In the 1950′s there were actually 24 different income tax brackets. The 92% one here corresponded to income $3.3M and up [2011 dollars].

    Adjusted for inflation the lower income taxes were higher than today across the board (especially the 0-$30,000 bracket, which was 22.2% [2011 dollars]). See here for a table of all the brackets in then-year and 2011-year dollars:

    This isn’t the complete picture–we’d need to look at what actual taxes paid by people at different income levels to make a true comparison.