Taxpayers across the country will celebrate the 237th anniversary of American independence on July 4th this year. As students of history will remember, one of the chief complaints of the American colonists against the British government in 1776 was unfair and burdensome taxation (including 18th century tax breaks for big business). With that in mind, the Tax Foundation presents a few facts for Independence Day that highlight the changing American tax system.
Top marginal income tax rate in 1913, the first year the modern income tax was levied: 7%
Inflation adjusted annual income (2012 dollars) to qualify for the top rate in 1913: $11,595,657
Top marginal rate for tax year 2013: 39.6%
Annual income needed to be subject to top rate in 2013: $400,000
Highest-ever marginal tax income rate: 94%
Years during which highest-ever marginal rate was levied: 1944-1945
Level to which it was lowered in 1946: 91%
Number of days from the beginning of the year until Tax Freedom Day in 1900: 22
Number of days from the beginning of the year until Tax Freedom Day in 1956: 97
Number of days from the beginning of the year until Tax Freedom Day in 2013: 108
Inflation adjusted income (2010 dollars) required to be in the top 1% of earners in 1980: $210,402
Income required to be in the top 1% of earners in 2010: $369,691
Percentage of federal income taxes paid by the top 1% in 1980: 19.05%
Percentage of federal income taxes paid by the top 1% in 2010: 37.38%
Percentage of federal income taxes paid by the bottom 50% of all taxpayers in 1980: 7.05%
Percentage of federal income taxes paid by the bottom 50% of all taxpayers in 2010: 2.36%
Inspired by the legendary magazine feature of compelling factoids, the Harper’s Index.
Sources: IRS and Tax Foundation publications.
Tax Foundation data table: U.S. Federal Individual Income Tax Rates History, 1862-2013 (Nominal and Inflation-Adjusted Brackets).
Tax Foundation study: Tax Freedom Day® 2013 is April 18, Five Days Later Than Last Year by William McBride, Kyle Pomerleau, and Elizabeth Malm.
Tax Foundation study: Summary of Latest Federal Income Tax Data by William McBride.