Politics: Taxes (Part 2)

Click here to read Part 1

Here we are working on the assuming that the conservatives who want to “god back to the good ‘ole days” aren’t evil bigots and really want to return to the economic and job growth the US experienced in the 1950’s.

Part 2: Breaking down the Costs 

The 1950’s had unprecedented involvement of government in what had previously been “private” sectors.  The National Highway adminstration is probably one of the most visible, but let’s not forget that by 1952 J. Edgar Hoover had more than doubled the number of agents in the FBI since the end of WWII.  The Korean War had over 1.5 MILLION drafted.  Another 1.3 million volantarily served. Nearly 3 MILLION people joined or served between 1950 and 1953 (not all of them necessarily were in Korea, that was probably only 1.5 million of them). Just to put this is perspective – I couldn’t find any official sources but the unofficial ones put total counts of “Foreign” (non-Afghani forces) around 950,000 have served at least one rotation in Afghanistan over 14 years (2001-2015). (which is significantly less than 1/2 of all US forces)

So we have a bigger military, still building roads and still have lots of government agencies – more than we did in the 1950s.  Conservatives are asking “how can we pay for all this excess?” I think they are only half asking this question correctly.  “How can we pay for all this” is a great question. The word “excess” is where I have issue.  I like well maintained roads. I really like knowing my bridges aren’t about to collapse on me. I like clean water. I like an educated populace. I like knowing pharmaceutical companies are being reviewed and their process confirmed as safe before they sell to my doctor (and thus me and my loved ones). I do not want to cut into saving peoples’ lives through security, medicine, or housing – much less improving lives through education and learning (way beyond just teaching too! -Libraries are the hearts’ blood of learning!)

Part 3: The big Stuff – Taxes (The boring stuff)

There is an actual Tax law passed in 1951 (Read it HERE). It’s only 120 pages long…. but at least it exists! I have read commentary that we don’t really have “tax law” at the moment – the tax code is so screwed up and complicated. And lord knows, I can’t find a comprehensive tax bill passed since like the 1980s. So, we will do what we can between 1951 and 2016. The instructions for 1951 (here) is 16 pages long. That’s the whole thing. 2016 instructions (here) is over 100 pages.  And that’s just the instructions – not any of the tables or schedules or worksheets you might need.

So I made a thing!  Click HERE to see the full worksheet/tables I made to explore this topic.

In Part 1, I discussed salary in 1951 was AVERAGED at $3,300 per year. So I made a table:

1951 Pay: Tax Paid: Left living on:
$1,500 $288.00 $1,212
$2,700 $535.20 $2,165
$3,300 $664.80 $2,635
$5,000 $1,076.00 $3,924
$10,000 $2,656.00 $7,344
$50,000 $27,416.00 $22,584
$275,500 $221,156.00 $54,344
$1,187,500 $1,023,716.00 $163,784

So in Part 1, I said $3,000 brought home $250/month – but this was NOT taking into account taxes.  Per this table – you can see that in 1951, they paid $600 for the year – so they only brought home $220 per month. This means after car, house, and gas – they still had $130 every month for everything else. Given this – I think I could survive on $130 a month (given the cost of food and such else at the time).  To really put it in perspective, I then did the same with some similar numbers for 2016 salaries (if you look at my data, you’ll see many of these around rounded near the 2016 Inflation counterpart):

2016 Equivalent Income: Taxes Paid: Left with:
$14,000 $2,688.00 $11,312.00
$25,000 $4,956.93 $20,043.07
$50,000 $10,932.31 $39,067.69
$75,000 $18,459.23 $56,540.77
$100,000 $27,516.92 $72,483.08
$450,000 $244,763.08 $205,236.92
$2,500,000 $2,003,532.30 $496,467.70
$10,000,000 $8,603,532.30 $1,396,467.70

Now, I don’t like in New York or Los Angeles, but from what I understand anything over $100,000 is a survivable income.

The number one difference I can find between 1951 and 2016 is one word: deductions. I was able to talk to someone who had made $53k in 2015 and took zero for tax withholdings (give it all to the government and get a check back).  Amount they paid to the government?  $11,700.  Refund? right at $1,000.  So really, they paid…. about the same amount in taxes as they WOULD based on the 1951 taxes – and it was a helluvalot more complicated to file.

Now, this person admitted they don’t do itemized deductions, they don’t have kids, and they don’t get every write-off imaginable.  And apparently Warren Buffett admits he pays a lower tax rate than his secretary (he’s been saying it for year: click here to see HIM say it!) so there is something richer people are doing to get out of paying their share of taxes. Unfortunately, I don’t have any friends who make millions and for some reasons millionaires don’t like publicly posting their tax returns… but Warren Buffett only paid 16% in effective taxes in 2015 – that’s significantly less than I paid even though I was getting a way bigger deduction for having a mortgage.

Summary:

I’ll be honest, I have very limited sympathy for rich people saying “they are taking all my moneys!” because – well… ummm… if you want to be able to say “my salary is $10M” and you can’t make $1.4M last AT LEAST A YEAR…. yeah I’m sorry you don’t deserve it. You might be too stupid to work a job that pays $10M a year. Now, there is something to be said that Hollywood is going to have to look at how actors get paid. ’cause I bet they won’t want a giant $12 million paycheck anymore, they’d rather have several smaller sums over a few years. Works well for the studios too ’cause they can spread out payments. Sounds like the definition of win-win scenario to me? I’m sure smarter people than I can figure something out.

Just to be clear, I’m not an economist and I’ve had to work really hard to try to pull some of these numbers together just because I don’t really know the sources or where to find the best numbers, but from what I am reading – the only reason I can see that politicians don’t want to simplify the tax code back to 1951 level of taxation:

They want to get re-elected.

Raising taxes is a very hard sell for politicians, but frankly, only about 20% of households cracks $100,000. So… for the 80% of families/people who are NOT cracking $100k, the difference will be negligible. And maybe, just maybe if the top 20% of people are actually paying their fair share something can be done to HELP the bottom 50% (sorry middle 30% – all I can say is “high tides raise all ships.” If it helps, I’m in that 30%).

So as I said at the beginning of Part 1: Politicians who want to “go back to the good ‘ole days” without raising taxes are full of shit.

 

References: 

Inflation Rates: http://www.usinflationcalculator.com/

2016 Tax Table: https://www.irs.com/articles/2016-federal-tax-rates-personal-exemptions-and-standard-deductions (simple version!)

Breakdown of 1950 Census data: https://www.census.gov/prod/www/decennial.html and  http://www.mybudget360.com/cost-of-living-2014-inflation-1950-vs-2014-data-housing-cars-college/  and http://www.thepeoplehistory.com/1950s.html (this one didn’t include references, but it does have the comparable data from some of my other sources) http://money.howstuffworks.com/Grocery-store-prices-for-14-items-in-1957.htm http://siefert.weebly.com/

Picture of Housing cost FROM the 1950 Census summary (the solid black line are the 1950 prices for houses…):
1950-housing-census

Price of Ford in 1950s: http://fiftiesweb.com/cars/ford/

My Own Worksheet of Prices/Information on taxes: https://docs.google.com/spreadsheets/d/1JGCRVz2Mm433EyUDjq54xO9HslTcyArpYqWYAuUfI4g/edit?usp=sharing

 

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