BIGG success is life on your own terms. There are five elements of BIGG success – money, time, growth, work and play. Today we want to focus on money.
We’ve talked before about the single biggest threat to your personal finances. With the election behind us, it’s time for our elected officials to get to work on the people’s business.
But it’s up to us to make sure we keep reminding them what we want. To help frame this discussion, we want to share with you the very first federal income tax schedule here in the United States:
1913 Federal Income Tax Rates
|
From |
To |
Rate |
|
|
$0 |
- |
$20,000 |
1% |
|
$20,000 |
- |
$50,000 |
2% |
|
$50,000 |
- |
$75,000 |
3% |
|
$75,000 |
- |
$100,000 |
4% |
|
$100,000 |
- |
$250,000 |
5% |
|
$250,000 |
- |
$500,000 |
6% |
|
$500,000 |
+ |
7% |
Source: Tax Foundation
This applied to all taxpayers – single, married filing jointly and separately.
For point of comparison, let’s look at our current tax schedule:
2010 Federal Income Tax Rates
|
From |
To |
Rate |
|
|
$0 |
- |
$16,750 |
10% |
|
$16,750 |
- |
$68,000 |
15% |
|
$68,000 |
- |
$137,300 |
25% |
|
$137,300 |
- |
$209,250 |
28% |
|
$209,250 |
- |
$373,650 |
33% |
|
$373,650 |
+ |
35% |
Source: Tax Foundation
We chose the schedule for married taxpayers filing jointly to stack the deck against the argument we’re about to make. (Single taxpayers actually can still earn relatively more at the same rate.) Also note that these rates are scheduled to increase in 2011 unless Congress extends the “Bush Tax Cuts”.
Before we draw any conclusions, let’s solve a problem with the above comparison. Let’s adjust the 1913 brackets to today using a handy inflation calculator. (The numbers below are actually 2009 dollars, the last year for which inflation data is known.)
1913 Federal Income Tax Rates
(adjusted to today)
|
From |
To |
Rate |
|
|
$0 |
- |
$428,685 |
1% |
|
$428,685 |
- |
$1,071,712 |
2% |
|
$1,071,712 |
- |
$1,607,568 |
3% |
|
$1,607,568 |
- |
$2,143,424 |
4% |
|
$2,143,424 |
- |
$5,358,560 |
5% |
|
$5,358,560 |
- |
$10,717,121 |
6% |
|
$10,717,121 |
+ |
7% |
Source: Tax Foundation
What jumps out?
- Marginal tax rates have increased drastically.
- When adjusted for inflation, the top bracket today would have been in the bottom bracket back then.
- And the top bracket then only applied to income over 28 times greater than the top bracket today!
It’s not apples to apples …
Admittedly, there is a difference between government today and government then. Government does more today.
Setting aside Social Security and Medicare since they aren’t funded through income taxes, government still delivers more services today than it did in 1913.
… but that’s the point!
Isn’t it time to ask some hard questions? Isn’t it time to ask ourselves IF government should deliver all these things?
We believe the intentions have been mostly honorable. However, it’s the results we need to focus on.
In spite of all this government spending, we have nine cities in our country where more than 25 percent of our people live in poverty. We lag in education in spite of the fact that we spend more per student than almost any nation in the world.
These are just two examples. There are many more.
Entrepreneuring government
The thing that bugs us is that, when you hear people inside the Beltway or inside state government, they act as if there is no possible way to cut costs.
Carl Icahn, the famous investor, once said that he’d never seen a Fortune 500 company that couldn’t cut costs at least thirty percent, if he had the right person running it.
If that can be said about Fortune 500 companies who at least face some market restraints, don’t you think government should be able to do the same?
BIGG success is about entrepreneuring your life. Entrepreneurs make the most of the resources they already have.
We need government that thinks entrepreneurially. We need government that makes the most of the resources already at its disposal. We need government that admits when it can’t do something well. We need to rethink what we expect government to do.
Entrepreneurs have to make very difficult decisions to get the most out of the resources they already have. Government leaders need to do the same thing. The situation only gets worse by delaying.
Your money’s at stake. What do you think?
Image in this post from slonecker
Well. I think that’s just brilliant! I’ve never seen income taxes framed just that way, and I really think you made the point wonderfully. Every US citizen should read and ruminate on this post.
Thanks, Amy! We’d had a hard time finding the tax rates organized like this, so that is why we did it. We appreciate that YOU appreciated it :)
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