Tax Bracket Calculator Brings Perspective to the Fiscal Cliff
With Pres. Barack Obama returning from his holiday in Hawaii to try to resolve the fiscal cliff conflict, we thought it was worth sharing this interactive chart created by Ritchie King at Quartz. You can type in your taxable income and see your tax rate in any year, going all the way back to 1913.
Although many are arguing that tax rates are too high, a historical glance at effective income tax rates -- defined as what you pay in federal taxes divided by your taxable income -- indicates that current percentages for top income earners are significantly lower than in decades gone by. During the 1950s and '60s, for example, the top income tax rate was over 90 percent.
House Speaker John Boehner (R-OH) has proposed a bill raising the marginal tax rate for those earning $1 million or more to 39.6% from 35%. Obama has proposed that same increase, but for everyone earning $400,000 or more. As the chart demonstrates, if you earned $1 million in taxable income this year, the effective tax rate would be 32.7%. In 1956, by contrast, it would have been 70.7%.
That hindsight -- plus a little push from Warren Buffett -- may give even the wealthiest opponents of tax hikes a little added perspective while we wait for the current tug-of-war to end.
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