Some Historical Tax Stats

The IRS’s Statistics of Income Division is a gold mine of data for serious tax wonks. One lesser-known product the IRS puts out every year is the public use microdata file – for a (not so) small fee, you get a sample of hundreds of thousands of tax returns that you can slice and dice any way you want. (The data is statistically blurred in such a way so as to prevent the identification of any individual taxpayer.)

I recently looked through some IRS microdata from the year 1960, and stumbled across the following interesting facts:

• In 1960, the top 1% of households earned 9% of all income, and paid 13% of all taxes. (In 2008, the top 1% earned 20% of all income, and paid 38% of all taxes.)
• The top marginal tax rate in 1960 was 91%, which applied to income over $200,000 (for single filers) or $400,000 (for married filers) – thresholds which correspond to approximately $1.5 million and $3 million, respectively, in today’s dollars. Approximately 0.00235% of households had income taxed at the top rate.
• A taxpayer at the very bottom of the top 1% (in other words, one who is right on the boundary between the 98th and 99th percentiles) had a nominal income of $24,435, or about $190,000 in today’s dollars. (In 2008, this figure was nominally $380,354, or $400,000 in current dollars.)