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We Don’t Pay Much In Taxes?

We like to complain about high taxes. We all do. The thought of the government taking “our” money drives us crazy. With the election right around the corner, we may be thinking about the effects on our pay checks due to a new president.

Most of what I read about income tax rates deals with the ultra-rich and the highest tax brackets. For example, I’ve read about top tax brackets in the 1940’s and 1950’s where the top earners had a 90% tax on the income in that highest bracket. To be clear, to reach that bracket, they would have needed to earn about $20 million per year. While interesting, it doesn’t apply to most Americans.

But what if we went back in time? Would we be paying more or less in taxes assuming our income was adjusted for inflation? I spent some time researching the details.

I have bad news for many of you: Your tax rate is among the lowest rate ever!

If you earn $100,000 today, you pay an effective tax rate of about 17%. But looking back between the 1940s and the 2000s, that effective tax rate was around 25%. You would have to go all the way back to the 1930’s to find an effective tax rate lower than what you pay now. Before 1940, there were many cases where the tax rate was between 2-5%.

See for yourself:
This calculator can highlight how much your income would have been taxed over the last 100 years