# Historical effective tax rates
**URL:** https://boards.straightdope.com/t/historical-effective-tax-rates/676626
**Category:** Factual Questions
**Created:** [December 18, 2013, 5:58am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626 "2013-12-18T05:58:36Z")
**Posts on this page:** 10
**Page:** 1
### Author:  [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)
#### Post date: [December 18, 2013, 5:58am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/1 "2013-12-18T05:58:36Z")
IIRC, the highest marginal tax rate was once at 91% and even in the 80s was 50%. I am pretty sure that no one actually paid that though. Before a major overhaul of the tax code in 1986, there were a zillion deductions one could claim which reduced the effective rate. Is there data on what people actually paid broken down by income level?
Thanks,
Rob
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### Author:  [@Isilder](https://boards.straightdope.com/u/Isilder)
#### Post date: [December 18, 2013, 6:53am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/2 "2013-12-18T06:53:40Z")
> [@sweeteviljesus](#):
>
> IIRC, the highest marginal tax rate was once at 91% and even in the 80s was 50%. I am pretty sure that no one actually paid that though. Before a major overhaul of the tax code in 1986, there were a zillion deductions one could claim which reduced the effective rate. Is there data on what people actually paid broken down by income level?
>
> Thanks,
> Rob
Sure there may be lots of deductions, and people with high incomes may try hard to use as many as possible, even renting cows to put on their property until the paperwork is processed, but remember the highest rate only applies to the highest incomes,
and so that would mean they would be having to claim a heck of lot of deductions ! How do you claim $200,000 of 1943 currency to avoid the 94% tax rate ?
Well the main way is to get your income shifted to something not called income. Thats not really the same as claiming a deduction.
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### Author:  [@Terr](https://boards.straightdope.com/u/Terr)
#### Post date: [December 18, 2013, 7:11am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/3 "2013-12-18T07:11:58Z")
['79 to present](http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456):
There’s a graph on [page 3](http://blackburn.house.gov/uploadedfiles/jec_republican_staff_analysis_historical_tax_rates_rhetoric_vs_reality.pdf.pdf) for historical effective marginal tax rate from '45 to present
And [this article](http://www.economicpolicyjournal.com/2012/12/what-top-1-really-paid-when-top-tax.html) talks about what the top 1%'s effective income rate was when the top marginal tax was in the 90s -
According to Internal Revenue Service data, presented below on a graph, from 1966 to 1970 the effective tax rate of an average tax payer in the top 1% was 30.85%. Throughout the time period in question, the effective tax rate of the average top 1% never exceeded 35%.
And here’s [another paper](http://www.manhattan-institute.org/html/ib_19.htm#.UrFLJ-LWvx8) that touches on this.
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### Author:  [@septimus](https://boards.straightdope.com/u/septimus)
#### Post date: [December 18, 2013, 7:57am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/4 "2013-12-18T07:57:39Z")
> [@Terr](#):
>
> … [this article](http://www.economicpolicyjournal.com/2012/12/what-top-1-really-paid-when-top-tax.html) …
> And here’s [another paper](http://www.manhattan-institute.org/html/ib_19.htm#.UrFLJ-LWvx8) …
😃 😃 Color me objective, but I save a lot of bother by just looking at the domain names on these links. Manhattan Institute was founded by William J. "We’ll know our disinformation program is complete when everything the American public believes is false’’ Casey.
The “ecconomic policy journal” is written by [Robert Wenzel](http://chrislbecker.com/2013/04/15/who-the-hell-is-robert-wenzel-from-economicpolicyjournal-com-really/). Give Mr. “Wenzel” some credit though, as his post includes
> [@](#):
>
> No less than Nobel Prize winners Paul Krugman has written that:
> The best estimates suggest that circa 1960 the top 0.01 percent of American paid an effective federal tax rate of more than 70 percent, twice what they pay today.
(My money’s on Krugman. 😉 )
PS: I don’t claim that organizations founded or run by the likes of Casey or “Wenzel” are incapable of valid research or conclusions. But only the gullible would bother to click such a link, if the citing Doper couldn’t find anything better.
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### Author:  [@Terr](https://boards.straightdope.com/u/Terr)
#### Post date: [December 18, 2013, 8:38am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/5 "2013-12-18T08:38:05Z")
> [@septimus](#):
>
> (My money’s on Krugman. 😉 )
Even if Krugman is right (and I would like to see a cite for that 70% figure) - in the 50s, the 0.01% of taxpayers was what - 3,000 to 5,000 people? I am sure what they paid was important - to them. But not to the country.
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### Author:  [@Terr](https://boards.straightdope.com/u/Terr)
#### Post date: [December 18, 2013, 8:43am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/6 "2013-12-18T08:43:43Z")
Here’s another [article](http://online.wsj.com/news/articles/SB10001424127887324705104578151601554982808) for the OP.
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### Author:  [@Terr](https://boards.straightdope.com/u/Terr)
#### Post date: [December 18, 2013, 8:51am UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/7 "2013-12-18T08:51:48Z")
Oh and guess what - you won’t be able to find a cite supporting Krugman’s “70%” fib. Here’s something from [Congressional Research Service](http://online.wsj.com/public/resources/documents/r42729_0917.pdf) that shows 45% figure. And here’s a [study that Krugman probably was referring to](http://elsa.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf) - except it shows about 31% effective income tax for the 0.01% in that time period. In order to get to 70%, you had to take into account the huge estate taxes and corporate taxes of the time that added another 40% or so. But those are not income tax.
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### Author:  [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)
#### Post date: [December 18, 2013, 2:25pm UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/8 "2013-12-18T14:25:46Z")
The OP started off thinking about this correctly, but quickly fell into the trap of an average effective tax rate. Marginal tax rates are really what is critical when thinking about it.
If the next dollar I earn is going to be taxed at 91%, I don’t really have a lot of incentive to increase production, etc. to earn it if I am only going to keep 9 cents. High marginal tax rates create a disincentive for growth and effeciency.
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### Author:  [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)
#### Post date: [December 18, 2013, 2:49pm UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/9 "2013-12-18T14:49:39Z")
I do believe that research has show that there isn’t a correlation between high marginal rates and economic growth. I could see that the tax code might create some perverse incentives, e.g. putting my money into renting cows instead of some more efficient investment, but I won’t claim that that did happen without a cite.
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### Author:  [@septimus](https://boards.straightdope.com/u/septimus)
#### Post date: [December 18, 2013, 3:34pm UTC](https://boards.straightdope.com/t/historical-effective-tax-rates/676626/10 "2013-12-18T15:34:21Z")
> [@Terr](#):
>
> … Krugman’s “70%” fib…But those are not income tax.
I don’t have time to research this, but think it’s wrong to call someone a “fibber” because _you wish they fibbed_ even though they didn’t. The Krugman quote referred to “effective federal tax” not “income tax.”
(A similar inexplicable blunder was committed by right-wingers to misunderstand Buffett’s famous claim.)