How were taxes / tax rates before the Obama era?

Discussion in 'Politics, Religion, Social Issues' started by palmerc2, May 17, 2013.

  1. palmerc2 macrumors 68000


    Feb 29, 2008
    Los Angeles
    Unbiased answers please, I don't care if you're a fan or not, I just want to know what YOU experience and if its different then before. I don't care what the news networks say, or what you want to believe, I want to know how much YOU see taken out of your paycheck. Quite frankly, I didn't have a high paying job until a couple of years ago, so I wouldn't know.

    What brings this up is, I'm taxed over 40% of my income which I feel is very unfair. I don't make anything close to $250k a year. What sparks this is I just got a significant bonus and 43% of it was taxed. I'm sorry, but that's just ridiculous, and in my opinion unfair.
  2. rdowns macrumors Penryn


    Jul 11, 2003
    Income tax rates are the same under Obama as they were under Bush except for those earning more than $400,000.

    As part of the stimulus, the SS tax was lowered by 2%. That expired on 12/31/12.
  3. chown33 macrumors 604

    Aug 9, 2009
    Sailing beyond the sunset
    Read this article. It has graphs showing historical rates, among other things:

    Not sure what you mean. Could be interpreted as:
    • You had 43% of the amount withheld for 2013 taxes.
    • You paid a 43% tax rate on the total amount.
    • You were taxed on only 43% of the total amount.
    An amount withheld isn't necessarily the amount that you will be taxed. You could be getting a larger refund next year.

    It's also unclear if an amount withheld covers Federal taxes only, or your Federal and State taxes. Some states will withhold from "bonus" or large lump-sum amounts, at rates higher than their typical withholding rates.

    For real tax advice, consult a competent tax professional.
  4. mcrain macrumors 68000


    Feb 8, 2002
    Tax experts are overrated! :D

    Tax rates are near historic lows. We need higher taxes, higher investment in US infrastructure and economic growth, and we desperately need to change the laws so that those who rape and pillage our economy aren't rewarded for doing so.
  5. classicaliberal, May 17, 2013
    Last edited: May 17, 2013

    classicaliberal macrumors regular


    Jul 19, 2011
    Modern tax rates are ridiculously high. It has nothing to do with Obama, they've been high for a very long time.

    People have revolted throughout history for taxation far less than the ~50%+ combined most middle-class Americans pay today (adding income taxes, property, consumption, etc.)

    The worst part of our tax system by far is the income tax. This is because it's a forced coercive tax. You have no choice whether or not to pay it, unlike a usage tax. It represents a majority imposing their will on a majority... saying, I don't care if you don't want to fund X, we want your money and we will take it at the point of a gun.

    It's immoral, bottom line.

    You don't have to go far back in American History to a time where we had no income tax (1800's and very early 1900's)... things were different then... they represented the fastest rate of growth in prosperity and we didn't have two very big things to worry about which all but define modern America today:

    #1) The warfare state
    #2) The welfare state

    The income tax was sold as a small and temporary measure to pay for a war, ever since politicians have been using it as a way to get more and more power, to take more and more from the populous, to use our endless funds to create their utopian state.

    Anyone who says we can't live with out an income tax is suffering from consistency bias and confirmation bias... they've never lived in a world without an income tax... so it must not be possible!

    These same people will try and convince you that these income tax funds go to 'important things' like schools, and roads, and fire departments and police... but this is ridiculous. All of these things and FAR MORE could be paid by nothing more than usage taxes and property taxes. Back in the day, they used to be. Before we tried to run the world and create a socialistic utopian society.

    If, like me, you don't believe we must police the world, and that it's not the federal government's role to take care of people from cradle to grave... well then, frankly, we don't need an income tax.

    If on the other hand you do think the government should do these things... then by all means keep projecting your will onto the rest of society and stealing their money by threat of force to fund your perfect society.
  6. miloblithe macrumors 68020


    Nov 14, 2003
    Washington, DC

    How on earth are you paying over 40% of your income in taxes? Are you a heavy smoker and drinker?
  7. Shrink macrumors G3


    Feb 26, 2011
    New England, USA
  8. iMikeT macrumors 68020

    Jul 8, 2006

    Because there's a tax on cigarettes and alcohol at the point of purchase.

    I also don't understand how anyone can pay over 40% in taxes these days especially with all the deductions when filing a tax return. I prepare my own return as well as helped many friends prepare theirs and I can tell you that in relation to any of our incomes, I have yet to meet anyone that pays an outrageous amount in income tax.
  9. vrDrew macrumors 65816

    Jan 31, 2010
    Midlife, Midwest
    A large percentage of the retail price of a pack of cigarettes and a (cheap) bottle of vodka goes to State and Federal excise taxes.

    Ergo if you spend a large fraction of your (after income tax) discretionary income on booze and smokes, it will significantly increase the total percentage of your income that goes to pay taxes.
  10. Shrink macrumors G3


    Feb 26, 2011
    New England, USA
    #10 it.

    So relieved it wasn't a joke that went over my head! :eek::p
  11. Sydde macrumors 68020


    Aug 17, 2009
    That does not resemble any of the history I have ever studied. The US has made use of its military as far back as you can look.

    So, you are suggesting this of a Constitutional Amendment, submitted in 1909 and ratified in 1913, not really proximal to any significant war? Not very easy for me to believe.
  12. miloblithe macrumors 68020


    Nov 14, 2003
    Washington, DC
    Others have explained it, but my point is I simply don't believe the OP is paying 40+% of his income in taxes.

    Here's an explanation of taxes on bonuses:

  13. samiwas macrumors 68000

    Aug 26, 2006
    Atlanta, GA
    Taxed over 40%? What on earth do you claim on your W4? When I claimed "Married, but withhold at higher single rate", zero allowances, and withhold an extra $50, I was taxed at about 42% if you include federal and state taxes, and SS and FICA added together. This was for checks around $3,500 per week. I only went this route to offset 1099 earnings. If I had claimed things normally, it would have been far less than that. So again, what are you claiming?

    And as someone else said, a very large single amount will get taxed differently by your employer, depending on what method they use. But at tax time, it all evens out. If you make nothing all year, then get a single $100,000 check at one time, it's going to have a massive amount of tax taken out, based on annualized earnings. Then at tax time, it's looked at as if you made $100,000 over the entire year, and the tax is refigured to the correct amount.

    If you are getting taxed 40% every week, you need to look at your W4.
  14. jnpy!$4g3cwk macrumors 65816


    Feb 11, 2010
    There are a lot of facts here:

    Fan? Of --- ?

    I haven't done this lately so I don't know the current rules, but in the past you could income average and re-average when your income has varied a lot. A program (like TurboTax) can make this very easy.

    Others have pointed out that that isn't the actual tax, that is withholding. When you compute your actual tax (which you can do quarterly if you want it back sooner) you can get some of it back.

    My taxes went up slightly when the new year started. The Social Security tax cut expired. Maybe if I had gotten a raise, my taxes would have gone up also?
  15. NT1440 macrumors G4


    May 18, 2008
    Are you mixing federal taxes and state taxes? 40% to federal sounds ludicrous, especially considering how we essentially pay large companies when they submit their taxes.

    Silly human, should have been a corporation, you get more rights!
  16. Aragornii macrumors 6502

    Jun 25, 2010
    Californian, here. My marginal tax rate has skyrocketed to 52.9% under Obama, so yes, my taxes are way up. This is mostly drive by the new Obamacare taxes, Obama's increase of the top Federal tax bracket, and CA's new top income tax bracket.
  17. hafr macrumors 68030

    Sep 21, 2011
    Maybe he was talking about the income tax that was imposed around the time of the American Civil War to pay for it?


    What's your total tax burden though? Having a high marginal tax rate says very little about how much you pay in income tax ;)
  18. ugahairydawgs macrumors 68030


    Jun 10, 2010
    If everyone just paid their share we'd be doing alright. Cut out all of the deductions and credits and lets get a base line progressive rate for all. We could even lower it further and it would still result in a healthy amount of cash coming in the door.
  19. sjinsjca macrumors 68020


    Oct 30, 2008
    Pleased to meet you.

    The Federal Income Tax is by far my largest expense. More than my mortgage by a long mile. More than my son's college tuition at his private college. More than food, health care, retirement contributions. More than every other budget item. And it's going up. It went up in January. It bites hard, as does inflation lately.

    In fact, inflation is part of the problem, because it pushed me into the Alternative Minimum Tax for the first time a few years ago (and every year since). The first indication of trouble in that regard was when my tax preparer handed me a five-figure tax-due bill. I'd changed nothing from the year before: same withholding exemptions, a little more income, and WHAM.

    As an ordinary taxpayer with fairly simple finances in a costly state with what by national standards would appear to be a solid upper-middle-class income, there are very few deductions available to me: home mortgage interest, 401(k) contributions, state taxes. Most other deductions are not available to me because of my income, which makes the effective rates I pay all the more "progressive". For example, there are deductions for college expenses available to many taxpayers but not to me.

    To look at my income, you'd think I must be rolling in it. But I drive a ten year old car (paid for, thank G-d). My modest fifty-one-year-old house, bought 18 years ago, needs paint. My roof is looking iffy. My water heater is running on borrowed time. My wife and I have no entertainment budget, spend nothing on non-essentials, very rarely eat out. We recently took our first vacation in more than five years, on airline and hotel points.

    It hurts. It hurts every month. Put together, my state and Federal taxes are EU-class without the cradle-to-grave goodies. I do extra work on the side to make ends meet and only pray that my health holds out until my kids are out of college.

    Anyone who thinks our tax system and rates are reasonable should have a little chat with me.
  20. samiwas macrumors 68000

    Aug 26, 2006
    Atlanta, GA
    Well, you certainly got me curious.

    In one year, our yearly household income dropped in half to under $75k. This was due to my wife's pregnancy causing her to have to stop working, and some of the projects I worked on closing, all at once. Before, we were rolling in it, not worrying about a thing. Now, it's a little bit different. But, the biggest change we made in our life was trying out generic store brands for some food, and cutting our eating out down some. We also travel less, but that's mostly due to having a baby to contend with. Other than that, we still live almost the same life. All the hospital bills from his birth are paid off, car which was new the week before we found out we were pregnant is almost paid off, no CC debt, and paying extra on the mortgage each month. Our taxes before were huge, but didn't hurt too much. Now, they have dropped considerably.

    So, I'm trying to figure out what a "solid upper-middle-class income" is, and why you are struggling so much on it.
  21. citizenzen macrumors 65816

    Mar 22, 2010
    Simple math.

    My mortgage—including insurance and property taxes is $800 per month or ~16% of my income.

    Am I supposed to be outraged if the Feds tax more than 16% of my income?

    Because that tax rate would seem pretty low to me.
  22. sjinsjca macrumors 68020


    Oct 30, 2008

    My mortgage is more than yours. Not a surprise: Incomes in my region tend to be high by national standards, but so is everything else. What would be regarded as an unpretentious middle-class lifestyle elsewhere requires the aforementioned "solid upper" income here. I recall a friend from another region visiting and noticing with stunned horror a real-estate mailing that I'd tossed on the kitchen table, showing a typical house rather similar to ours selling for fully four times what it would in his very nice neighborhood. He was seriously rattled: "That much money... for that?" Yup.

    But incomes scale somewhat proportionately here, too, and through the miracle of "progressive" taxation and the AMT, that ratchets up the Federal take significantly for me. So if I make M times your gross, I see significantly less than M times your take-home. Significantly.

    Then there are the state income taxes, which are scandalous here-- higher than Russia's. And property tax.

    There are several regions in the country in which this scenario (high prices/high incomes/high state taxes/magnified Fed taxes) is true.

    Of course, the obvious answer is: move. I'd really rather not, but taxes may force me to. Because as high as our mortgage is, our Fed + State taxes are higher, summing to roughly half my "solid upper" income, leaving about half from which I must pay for my inflated house, inflated energy and inflated everything else. And the sales tax on everything I buy.

    So let's compromise: I'll agree your 16% is not high if you agree my ~50% is!

    Of course, you're talking Fed-only, whereas I'm summing my tax burden. So let me guess your total tax burden is maybe up to 25%, versus my 50%. You get to keep 75% of what you make, then. I get to keep about half of mine. There's no way that can be fair.
  23. sjinsjca macrumors 68020


    Oct 30, 2008
    Well, I've given about as much info as I care to on this public forum. Income and tax aside, our financial situations are somewhat similar. Things could certainly be worse for both of us, and I do count my blessings.

    But have you ever gone from one year to the next with very few changes to your situation and no changes whatsoever to your withholding, yet swing from a small Federal refund each year to a sudden five-figure Federal tax-due? That happened to me, out of the freakin' blue, thanks to the AMT + inflation, and for the next several years my tax accountant and I cranked down on my exemptions each year--which was painful by itself!--but there'd still be a stubborn, sizable amount-due each April. This year was the first year of the past five or six that it wasn't like that-- my tax-due was only about $1600, but it took all those years of ramping up my withholding to get it there. Ouch!

    And yes, my accountant is competent. But in bewilderment and concern, I took my records to another accountant, and she could find no errors and had no suggestions.

    (With reference to the title of this thread, I don't blame Obama for my insane tax situation, though it does seem he never met a tax hike he didn't like or a kulak that he did. The AMT slammed me hardest back when he was a newly minted Senator, meaning about thirty seconds before he applied for his promotion. Let's face it, the tax code is a bipartisan mess.)
  24. dukebound85 macrumors P6


    Jul 17, 2005
    5045 feet above sea level
    Why do you assume his is also 16%?

    My rental payment is 33% of my income for example...
  25. citizenzen macrumors 65816

    Mar 22, 2010
    He gave an anecdote.

    I replied with mine.

    Each one should be seen for what it is.

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