Also those past high top rates kicked in at much lower levels, compared to the mean or median income, then the new 39.6% rate will kick in, and the wealthy tax payers had an easier time avoiding the top rates. There where many deductions that are not available now (for example non-mortgage interest could be deducted), and the AMT didn't start until 1970, didn't effect many people to awhile after that, and had a lower rate before 1993. Also other tax rates where generally lower when the federal income tax's marginal rates where higher.
The comparison of raw tax rates as that graph does is a sure sign of a person with an agenda trying to make some point or other.
A person cannot competently compare tax rates from 1980 with those of 1989, for example, and take away anything meaningful. Rates were lower in '89, but as you pointed out, deductions were gone.
Reagan moved us toward a "flat" tax, cutting the tax rates and the number of brackets, while the deductions were cut massively. Other programs like Investment Credits, Income Averaging, etc., went away as no longer necessary. And Ronald Reagan eliminated tax shelters -- so-called "loopholes", which were a huge problem prior to the TRA86.
A simple comparison of the "maximum" rates means nothing. The often-cited "91%" rate was a rate for married couples filing separately -- something that practically never happens. Even the high rates of 1918 applied only to incomes exceeding a million dollars, which probably would have numbered fewer than 100 in 1918.
Totally misleading, but some people are easily misled. |
