Archive for August, 2011

Individual and Corporate Tax Rates in the U.S.

August 15, 2011

On a discussion group I subscribe to, there has been much discussion of economic subjects, and that motivated me to look into historical patterns in the United States.

What follows are two sets of graphs:  One showing individual income tax rates in the lowest and highest brackets from 1913 to 2008, and the other showing corporate tax rates in the period from 1942 to 2009.  These were the longest series I could find at the moment, so this is the result.

As usual, clicking on the graph will bring up a larger,more readable image.

Individual Tax rates, 1913 to 2008

Corporate Tax Rates, 1942 to 2009

Significant Points:

For individual income tax rates, the lowest and highest in 1913 were at 1% and 7% respectively.  by 1944, the lowest bracket was 23% and the highest bracket was 94%.

After that, the top tax bracket remained at a range between 94% and 70% until 1980, after which it dropped steadily, reaching 35% in 2009.

For the low bracket, it was 1% in 1913, reaching a high of 22.2% in 1952 and thereafter dropping to 10% in 2008.

For Corporate taxes, the lowest bracket was 25% in 1942 while the highest bracket was 40%.  By 1952, the lowest bracket had reached 30% and thereafter steadily dropped to 15% by 2009.  During that same time period, the highest bracket began with a 40% rate in 1942, reaching a high of 53% in 1968, and thereafter began a drop until by 2009 it was 35%, with a low of 34% in 1988.

I am currently exploring correlations with these tax rates and other economic variables, and the only one I have looked at thus far is the unemployment rate, which has no significant correlation along the trend lines. (16% with the low income bracket and 0.00% with the high income bracket.

I haven’t done any correlations with the corporate rates yet, but suspect similar findings.

An interesting set of variables to explore would be with infrastructure spending and with defense spending, but those datasets are not complete yet.

More to come.