History Lesson: The Top 0.05% Paid 49% of the Taxes
History Lesson: The Top 0.05% Paid 49% of the Taxes .
What year was it, and where it did happen when?
6.56% of the population filed an individual tax return.
93.44% of the population did not file an individual tax return.
The top 6.56% paid 100% of the individual income taxes.
Would you believe that out of 7,259,944 personal income tax returns filed, that the top 3,649 filers accounted for 3.06% of all income and paid 29.86% of total taxes?
Why did the 3,649 top filers pay such a large share of total taxes?
Surtax. It ran 65% on income of $1,000,000 or more.
84.5% of all income tax flyers were exempt from the surtax.
15.5% of all income tax flyers were subject to the surtax.
49% is the amount the top 3,649 filers paid of all surtaxes.
44.16%: The effective tax for the top 3,649 filers.
4.53%: The effective tax for all filers.
3.63%: The effective tax rate, less the surtax, for the top 3,649 filers.
2.01%: The effective tax rate, less the surtax, for all filers.
5.51% the percentage of total income tax, excluding the surtax, paid by the top 3,649 filers.
$ 148.08: The average tax per return filed:
$4,796,596.00: The average tax per the top 3,649 filings.
Why was there surtax?
The War Department had gone on a spending increase.
The good news.
Dividends were exempt from the normal tax.
Think the government cannot quickly reduce spending?
In three years, 1916 to 1919, war spending went from $183 million to $9,090 million. That is an increase of 4,967%. The next four years, 1919 to 1923 took spending from $9,090 to $397, a decline 96%. That was an efficient government at work. Impressive without the use of today’s high tech tools, wouldn’t you say?
Why it is important?
Congress appears to at a deadlock over spending and taxes. This might have an impact on the financial markets and economic growth. Waiting until a lame duck session to address the issue is not expected to be a wise move. As many might be distracted looking for work.
What happens if the elections don't turn out as planned?
Look at the elections surprises in Europe. It could happen in the USA.
Maybe going back to a temporary surtax to pay for increased spending is the way to go.
What do you think?
1920 in The United States of America
Annual Report of the Secretary of the Treasury on the State of Finances.