Effective tax rates, inclusive of multiple types of tax, by quntile, since the 1960s

One of my students asked a really great question yesterday in class. We were talking about the home front during World War II. I observed that Roosevelt paid for the war through some borrowing but also, significantly, by raising tax rates, a lot. The highest bracket was paying upward of 90% of income in tax. Though the tax was progressive, it was a lot. My student noticed this and wondered if such a number could really be true. It seemed huge!

I had to agree, but was left feeling as if I did not fully understand how the contours of American tax policy in multiple dimensions. Exactly what amounts were people, at all levels of society, paying in the past? What did tax returns look like? How did the brackets change? What did social debates about tax look like? What amounts were people really paying, at the federal, state, and local level? How did this compare, in real income, to other periods of history.

So I went searching and found multiple sources of information about taxation, but (curiously) really very little that helped me to understand the tax rates any better. Still, here are the links.

Finally, the Tax Policy Center has published a list of the highest marginal tax rates, since 1913.  The same data, from the Congressional Budget Office, is highlighted by a CPA who has a site/blog that seeks to educate,  with some footnotes and explanations, which is why I link to it here. See Hans Kasper’s take.  Truth and Politics also shows the same information, slightly differently.

Alternately, see economist (and Bush appointee) Greg Mankiw’s take, from data put out by the Congressional Budget Office; it shows tax rates from 1979 through 2005. Or, better yet, go directly to the CBO’s report.

Alternately, see David Leondhardt’s, New York Times Article, The Plain Truth about Tax Cuts from 2007. It includes the table (shown above, left) and is very lucid.