do you remember when tax rate exceeded 50%? (paying, taxes, credit)

[gunslinger256]

I thought I caught a little snippet about taxes being 90% at some point in the recent past.

I was too young to be aware of the taxation and my parents never spoke/complained about it.

Do you remember having 90% of your paycheck taken out in taxes?

My grandfather retired in the 1960s and I would imagine he and my dad were around during the high taxation days but they never spoke about it.

[Pitt Chick]

"For tax years 1944 through 1951, the highest marginal tax rate for individuals was 91%, increasing to 92% for 1952 and 1953, and reverting to 91% for tax years 1954 through 1963."

from https://en.wikipedia.org/wiki/Taxati..._United_States

[Lowexpectations]

Back when the top marginal rates were in the 90s the effective rate for the vast majority of those in the bracket was 45-50%

[flyingsaucermom]

This is very interesting and new knowledge for me. I can't imagine paying that much in taxes and yet so many awesome things were happening to Americans between end of WWII and the mid-60's. Levels of happiness and optimism increased until the mid-50's.

[Merkin]

With Federal + State + FICA + Local taxes today we can be up to 60%

[Mr. Zero]

Our current federal + state marginal income tax rate is over 50%. It's a good position to be in, but it's difficult trying not to shake my head every time we write another check for a quarterly estimate.

It's also much better than a 90% marginal tax rate, and that history and uncertain future rates are part of what motivates us to opt for a Roth 401k as part of our investment mix, even though we're in a pretty high bracket already.

[1insider]

Any of us who were affected by 90% plus rates would have been earning over $2.5 MM in 2016 dollars then and would be in our 80s or older now. I'm guessing very few of us hit both those criteria.

[ncole1]

Originally Posted by gunslinger256

I thought I caught a little snippet about taxes being 90% at some point in the recent past.

I was too young to be aware of the taxation and my parents never spoke/complained about it.

Do you remember having 90% of your paycheck taken out in taxes?

My grandfather retired in the 1960s and I would imagine he and my dad were around during the high taxation days but they never spoke about it.

Nope. I am too young.

[shamrock847]

As someone mentioned just because the marginal rates were higher doesn't mean people actually paid more taxes.

A lot more things were deductible back then (like interest for credit cards, car loans, other loans) and the higher income folks who would have been impacted by these rates also had access to a number of tax shelters and strategies which meant they paid no where near those rates. Also, corporate executives and others impacted by those rates got a lot of perks paid for by their employers instead of getting cash compensation which they would have been taxed on.

In part, the high tax rates were part of the reason middle income workers started being offered benefits such as pensions and health insurance, rather than just higher wages.

Subsequent tax reforms brought down the marginal rates but also closed a lot of the loop holes people were using to avoid paying those high rates.

[Submariner]

I started working at 15, I paid whatever the EZ-form said to pay. Which I think was around 15%. I did that until I was 25, when I began to learn to itemize my taxes and I studied tax-planning.

I have not paid into Income Taxation since 1983.