Warm Southern Breeze

"… there is no such thing as nothing."

Let’s Talk Taxes!

Posted by Warm Southern Breeze on Wednesday, March 30, 2022

We have a crazy economy, for sure.

And, it seems to be working best, and most, for the über-wealthy, the out-of-touch-with-reality “multi-billionaire class” type folks, and their corporations. You know… the ones who pay little-to-no income taxes upon their vast wealth.

Those are the ones who have no idea what a gallon of milk costs, what diapers cost, what childcare costs, and who, instead of going to Disneyland, Dollywood, or down the road for vacation, dish out million$ from their morbid exce$$ to fly to outer $pace ju$t for fun, or buy boats so big that they won’t fit under a bridge on an inland waterway where they’re built so they get the government to temporarily dismantle the historical landmark just to sail through it, etc.

We’re talking about folks like Jeff Bezos and his Amazon Corporation, Elon Musk and his Tesla/SpaceX corporations, the so-called “Oracle of Omaha” CEO of holding company Berkshire Hathaway, Inc. Warren Buffett, Microsoft founder Bill Gates, Facebook founder Mark Zuckerberg, Google co-founders Larry Page & Sergey Brin, Oracle co-founder Larry Ellison, former Microsoft CEO Steve Ballmer, and Bloomberg founder/owner Michael Bloomberg, all who round out the Top 10 Wealthiest People in America.

These are men who are individually, each worth more than the entire GDP of Iraq — U.S.$201,472,000,000 — and 163 other nations in the world.

And combined, they’re worth U.S.$1,346,600,000,000 — between the GDPs of Spain (U.S.$1,439,958,000,000) & Mexico (U.S.$1,285,518,000,000), ranked 14th & 15th, respectively, internationally, of 216 nations.

According to Forbes, their wealth is practically unimaginable, which “membership” in the Top 400 grouping now requires a minimum net worth of $2.9 billion, up $800 million from a year ago.

As well, the vast majority of them are greedy, also according to Forbes, which wrote,

“The 400 wealthiest Americans saw their collective fortune increase 40% over the last year,
to $4.5 trillion.

What hasn’t increased?

Their generosity.

The number of Forbes 400 members who gave away more than 20% of their net worth since last year’s list,
dropped from 10 to 8,
while those who gave away less than 1% of their wealth went from 127 to 156.”

Imagine that, eh?

I got mine, good luck getting yours.

They’re probably cheapskate tippers, as well. Not at all like the anonymous folks who leave a $1000 tip for a $25 meal, or skinflints who chisel the pizza delivery driver.

What an attitude, eh?

But, let’s talk about income taxes, which are not paid by such folks, who craftily, and legally — yes, legally — hide their money from the tax man through various mechanisms, some of which frankly, are abusive, such as placing once-cheap company stock(s) in Roth IRAs and other retirement income vehicles, which accrue tax-free… even though they’re phenomenally wealthy — even rich as Croesus, perhaps even richer. Such plans were never made for folks like them, anyway.

Those type of folks — the ones who do NOT pull their weight, who do NOT pay their fair share — are truly, and in earnest, moochers, grifters, shysters, cheaters, users-abusers, veritable “welfare mothers” on the system, quite simply because they DO NOT contribute to it as patriotic Americans by paying income taxes, and instead, shift the burden of them onto folks like you, and me.

Our nation’s income tax system is seriously out-of-whack, and has been on a downhill slide for quite some time. At least since the Reagan administration era, or even earlier.

Not only are the number of tax brackets decreased, but the steps within them are compressed as well, thereby bunching many people into the same bracket… even though one earns much more than another, and yet, they both pay the same percentage rate.

Simply put, that’s unjust, and unfair.

It’s like asking an 80-year-old, 80-pound granny to move a 400-pound rock, while the strongman bodybuilder stands by and takes a coffee break and watches her struggle.

To illustrate the case in point, let’s examine the 2021 U.S. Federal Individual Income Tax Rates and Brackets, which are as follows:
NOTE: Last law to change rates was the Tax Cuts and Jobs Act of 2017.

For Married Filing Jointly:
7 Rates: 10.0%, 12.0%, 22.0%, 24.0%, 32.0%, 35.0%, and 37.0%.
7 Brackets (greater than): $0, $19,900, $81,050, $172,750, $329,850, $418,850, and $628,301.

Married Filing Separately:
Rates: Rates: 10.0%, 12.0%, 22.0%, 24.0%, 32.0%, 35.0%, and 37.0%.
Brackets (greater than): $9,950, $40,525, $86,375, $164,925, $209,425, and $523,600.

Single Filer:
Rates: 10.0%, 12.0%, 22.0%, 24.0%, 32.0%, 35.0%, and 37.0%.
Brackets (greater than): $0, $9,950, $40,525, $164,925, $86,375, $209,425, and $523,600.

Head of Household:
Rates: 10.0%, 12.0%, 22.0%, 24.0%, 32.0%, 35.0%, and 37.0%.
Brackets (greater than): $0, $14,200, $54,200, $86,350, $164,900, and $523,600.

As can be seen, there is great uniformity throughout the tax system, which is to say, that there is little difference in the rates and brackets for all taxpayers/income earners.

Personal Income Tax History 1944 — 1964

• In 1964, Last law to change rates was the Tax Reform Act of 1964.

• From 1944 to 1963 rates were largely unchanged, with income tax rates upon the wealthiest at 90%+.

• Pursuant to the the Internal Revenue Code of 1954, the Last law to change rates was the Internal Revenue Code of 1954, under which the 3% normal tax and the surtax rates were combined in a single set of rates and the maximum effective tax on net income was 87% of income.

• The year prior, in 1953, Tax rates include normal tax of 3% plus applicable surtax, and the maximum effective tax rate on net income was 88%. The last law to change rates was the Revenue Act of 1951.

• In 1952, the last law to change rates was the Revenue Act of 1951.

• In 1951, Tax rates include normal tax of 3% plus applicable surtax, and the maximum effective tax rate on net income was 87.2%. Last law to change rates was the Revenue Act of 1951.

• In 1950, Tax rates include normal tax of 3% plus applicable surtax, and the maximum effective tax rate on net income was 87.2%. Reductions for 1950 were 13% of total normal tax and surtax up to $400, 9% of tax from $400 to $100,000, and 7.3% of tax in excess of $100,000. Last law to change rates was the Revenue Act of 1950.

• In 1949, Tax rates include normal tax of 3% plus applicable surtax, and the maximum effective tax rate on net income was 77%. Reductions for 1949 were 17% of total normal tax and surtax up to $400, 12% of tax from $400 to $100,000, and 9.75% of tax in excess of $100,000. Last law to change rates was the Revenue Act of 1948.

• In 1948, Tax rates include normal tax of 3% plus applicable surtax, and the maximum effective tax rate on net income was 77%. Reductions for 1948 were 17% of total normal tax and surtax up to $400, 12% of tax from $400 to $100,000, and 9.75% of tax in excess of $100,000. The Revenue Act of 1948 allowed income-splitting by married couples. Last law to change rates was the Revenue Act of 1948.

• And in 1947, Tax rates include normal tax of 3% plus applicable surtax, and the maximum effective tax rate on net income was 87.2%. Last law to change rates was the Internal Revenue Code of 1945.

• In 1946, Tax rates include normal tax of 3% plus applicable surtax. Tax liability according to these rates was reduced by 5%, and the maximum effective tax rate on net income was 85.5%. Last law to change rates was the Internal Revenue Code of 1945.

• The last tax rate change before that was in 1945, when Tax rates include normal tax of 3% plus applicable surtax, and the maximum effective tax rate on net income was 87.2%. Last law to change rates was the Revenue Act Code of 1945.

• While in 1944, Tax rates include normal tax of 3% plus applicable surtax. The maximum effective tax rate on net income was 90%. Last law to change rates was the Individual Income Tax Act of 1944.

• In 1943, Tax rates include normal tax of 6% plus applicable surtax. Victory tax of 5 percent of income in excess of $624 less credits of 25% of the tax for single persons, 40 percent for married persons or heads of household, and 2% for each dependent. Last law to change rates was the Revenue Act of 1942.

• In 1942, Tax rates include normal tax of 6% plus applicable surtax. Victory tax of 5% of income in excess of $624 less credits of 25% of the tax for single persons, 40% for married persons or heads of household, and 2% for each dependent. Last law to change rates was the Revenue Act of 1942.

And in fact, for several years, the top tax rate was 90%+, and the top tax rate did not get below 90%+ until after 1963, when it became 77%, pursuant to the Tax Reform Act of 1964.

In stark contrast, here are the 1944 U.S. Federal Individual Income Tax Rates and Brackets:

For Married Filing Jointly:
23 Rates: 23.0%, 25.0%, 33.0%, 37.0%, 41.0%, 46.0%, 50.0%, 53.0%, 56.0%, 59.0%, 62.0%, 65.0%, 68.0%, 72.0%, 75.0%, 78.0%, 81.0%, 84.0%, 87.0%, 90.0%, 92.0%, 93.0%, and 94.0%

23 Brackets (greater than): $0, $2,000, $4,000, $6,000, $8,000, $10,000, $14,000, $16,000, $18,000, $20,000, $22,000, $26,000, $32,000, $38,000, $44,000, $50,000, $60,000, $70,000, $80,000, $90,000, $100,000, $150,000, and $200,000.

So, let’s get some perspective on the matter.

According to the CPI (Consmer Price Index) Inflation Calculator provided by the Bureau of Labor Statistics

In January 1944:

$200,000 had the same buying power as $3,261,103.45 — in February 2022.
$10,000 had the same buying power as $163,055.17 — in February 2022.
$5,000 had the same buying power as $81,527.59 — in February 2022.
$2,000 had the same buying power as $32,611.03 — in February 2022.

Today, those earning:

$3,261,103.45 pay 37.0% — all filers with $200k income in 1944 would pay 94%.
$163,055.17 pay 22% — all filers with $10k income in 1944 would pay 41%.
$81,527.59 pay 22% — all filers with $5k income in 1944 would pay 29%.
$32,611.03 pay 12% — all filers with $2k income would pay 25%.

And today, NOBODY would pay more than 37%.

Today, we start taxing at > (greater than) $0 — $19,900.

Federal Poverty Level (FPL)

Family size 2021 income 2022 income
Individuals $12,880 $13,590
Family of 2 $17,420 $18,310
Family of 3 $21,960 $23,030
Family of 4 $26,500 $27,750

 

Yesteryear, we started taxing at > (greater than) $0 — $2000… which is today’s equivalent of $32,611.03.

Clearly, today, we’re taxing the poor.

Tax Table Comparison 2021 & 1944

Year Married
Filing Jointly
Rate
(Greater Than)
Bracket
1944
Equivalent
2021 10% $0
12% $19,900 $1,220.45
22% $81,050 $4,970.90
24% $172,750 $10,594.58
32% $329,850 $20,229.35
35.0% $418,850 $25,687.63
37.0% $628,301 $38,533.03
2022 Equivalent
1944 25% $2000 $32,611.03
29% $4,000 $65,222.07
33% $6000 $97,833.10
37% $8000 $130,444.14
41% $10,000 $163,055.17
46% $12,000 $195,666.21
50% $14,000 $228,277.24
53% $16,000 $260,888.28
56% $18,000 $293,499.31
59% $20,000 $326,110.34
62% $22,000 $358,721.38
65% $26,000 $423,943.45
68% $32,000 $521,776.55
72% $38,000 $619,609.66
75% $44,000 $717,442.76
78% $50,000 $815,275.86
81% $60,000 $978,331.03
84% $70,000 $1,141,386.21
87% $80,000 $1,304,441.38
90% $90,000 $1,467,496.55
92% $100,000 $1,630,551.72
93% $150,000 $2,445,827.59
94% $200,000 $3,261,103.45

But what if we INCREASED the Child Tax Credit to, say… $15,000 per child — but only for the working family, folks making the Real Median Personal Income, which in 2020 was $35,805, according to the United States Census Bureau (USCB) as reported by FRED — St. Louis Federal Reserve Economic Data.

The USCB also found the Average Population per Household for All Households was 2.51. The USCB defines household in a straight-forward manner, meaning it “includes all the people who occupy a housing unit (such as a house or apartment) as their usual place of residence,” and the size is calculated by dividing the number of people (population) by the number of households, which excludes excludes group quarters.

The Congressional Research Service (CRS) published a 51-page document entitled “Federal Individual Income Tax Brackets, Standard Deduction, and Personal Exemption: 1988 to 2022,” which is document RL34498, and was last updated December 6, 2021.

A1. For tax year 2021, the Child Tax Credit increased from $2,000 per qualifying child to:

  • $3,600 for children ages 5 and under at the end of 2021; and
  • $3,000 for children ages 6 through 17 at the end of 2021.

Note: The $500 nonrefundable Credit for Other Dependents amount has not changed. For more information about the Credit for Other Dependents, see IRS Schedule 8812 (Form 1040), Credits for Qualifying Children and Other Dependents.

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