Tax Rates are a Conundrum
It’s the New Year, and I’m sure that the first thing on your mind, as you recover from the holiday season, is income taxes. Most of you may not remember this, but at the outset of 2013, Congress and the President raised the top tax rate for individual taxpayers to 39.6%, up from 35%, where it had been since 2003. The increase in the top rate drew the wrath of some and praise from others.
Tax rates are a bit of a conundrum. A look at the top individual tax rates from the inception of the tax law in 1913 until today reveals tremendous fluctuation:
The above is just a sampling of where the rates have been. During some of the intervals reflected above, the rates may have gone up and/or down a number of times.
Tax rates are often misleading, especially when viewed in a vacuum. For example, the top tax rate went from 70% in 1980 down to 50% in 1982, a decrease of mroe than 71%. However, during this same period, the gross collection on individual income taxes went from $288 billion to $353 billion, an increase of 23%. Smoke and mirrors, you say? No, just playing with the base income to which the rates are applied.
Therefore, if there is one thing that we can take away from this exercise, it is that when it comes to taxes, all is not as it appears. Give your Marcum LLP Tax Advisor a call. Things could be better or worse than you think.