Ronald Reagan: Pushing the deadliest drug known to humankind.
(And wishing you a Merry Christmas!)
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Ever since revealing his approximate tax rate last week, Republican presidential candidate Mitt Romney has taken heat from rivals and critics over what he said he pays on income derived mostly from capital gains, "probably closer to the 15 percent rate than anything." Today, he released his tax returns, showing that he paid an even lower rate of less than 14 percent in 2010.Historically, tax rates on capital gains have not been so low since the Great Depression.
Under President George W. Bush, the maximum capital gains tax rate was 15.35 percent. The highest capital gains tax rate in U.S. history was put in place under Woodrow Wilson's presidency during World War I, when it was as high as 73 percent, according to Roberton Williams, a senior fellow at the Tax Policy Center.
"A substantial portion of his income is probably not taxed at all," Williams said before Romney released his tax returns Tuesday and revealed that he paid a 13.9 percent tax rate. "His taxable income is certain to be below his total income."
Romney's tax plan would extend the 15 percent capital gains tax rate for the highest income earners, while cutting it entirely for people who earn less than $200,000 in additional annual income from sources other than capital gains.
Fellow Republican candidate Newt Gingrich, too, proposes a tax plan to maintain the 15 percent tax rate. The only difference is Gingrich wants to make this tax optional for all Americans as a permanent flat tax.
But thanks to itemized deductions, Williams thinks under Gingrich's plan, "Romney would be paying virtually nothing."
The highest rate for regular marginal income tax in the twentieth century was instated under Franklin D. Roosevelt toward the end of World War II at 94 percent. A marginal income tax of over 90 percent for top earners lasted well beyond the end of the war.
Read on to find out how long top earners paid a marginal income tax rate for the highest income bracket of 90 percent or more, according to historical tax data from the Tax Policy Center.
Figures represent the rates in place at the beginning and ending year of each presidency.
Dwight D. Eisenhower
Marginal Tax Rate on Regular Income over $400,000: 92% - 91%
Maximum Tax Rate on Long-Term Capital Gains: 25%
During the administration of Republican President Dwight D. Eisenhower, a 92 percent marginal income tax rate for top earners in the United States remained from the previous administration of Harry S. Truman. At the time, the highest tax bracket was for income over $400,000.
This was nearly the highest tax rate for top earners in the century, just under the 94 percent rate for income over $200,000 instated during World War II under Franklin D. Roosevelt's presidency.
John F. Kennedy
Marginal Tax Rate on Regular Income over $400,000: 91%
Maximum Tax Rate on Long-Term Capital Gains: 25%
At the beginning of his presidency, John F. Kennedy inherited a tax policy with a 25 percent maximum rate on long-term capital gains and a regular income tax rate of 91 percent – nearly the highest income tax in the century.
There were no changes to these tax policies during his presidency.
Lyndon B. Johnson
Marginal Tax Rate on Regular Income: Over $400,000: 91% - Over $200,000: 75.25%
Maximum Tax Rate on Long-Term Capital Gains: 25% - 26.9%
The marginal tax rate on the highest regular income bracket fell below 90 percent for the first time in 20 years in 1964 – the first year of Lyndon B. Johnson's presidency.
This decrease put the tax rate at 77 percent for income over $400,000. By the end of Johnson's administration, the tax rate fell by 1.75 percentage points, but the threshold for income in the highest tax bracket also fell to $200,000.
This meant that more people were faced with the maximum regular income tax rate of 75.25 percent.
The capital gains tax rate began to rise during Johnson's presidency in a climb that would peak in the mid-70s.
Richard M. Nixon
Marginal Tax Rate on Regular Income over $200,000: 77% - 70%
Maximum Tax Rate on Long-Term Capital Gains: 27.5% - 36.5%
During the Nixon years, the regular tax rate for the highest income bracket decreased back to its level during Johnson's first year in office, and the capital gains rate continued to increase.
By the end of Richard M. Nixon's presidency, the capital gains rate rose by nine percentage points.
Mitt Romney's father, George W. Romney, campaigned for the Republican presidential nomination in 1967 and released his tax returns, "in a move believed without precedent in American politics," according to an article that year in the St. Joseph Gazette, a newspaper in St. Joseph, Missouri.
Romney Sr.'s tax returns showed that he made $2,972,923.58 over the previous year, and the total taxes he paid were $1,099,555.18, according to the St. Joseph Gazette.
In today's release of his tax returns, Romney Jr. revealed that he paid $3 million on total earnings of $21 million in 2010.
Gerald R. Ford
Marginal Tax Rate on Regular Income over 200,000: 70%
Maximum Tax Rate on Long-Term Capital Gains: 36.5% - 39.875%
Ford instated no change to the regular tax rate, but the capital gains maximum tax rate rose to 39.875 percent - its highest levels since the 1950s.
The capital gains tax rate has not been that high since.
Jimmy Carter
Marginal Tax Rate on Regular Income over $203,200 - $215,400: 70%
Maximum Tax Rate on Long-Term Capital Gains: 39.875% - 28%
Under Jimmy Carter, the income threshold for the highest tax bracket increased by $12,200.
The capital gains tax rate began its decline that would continue through today.
Ronald Reagan
Marginal Tax Rate on Regular Income: over $215,400: 69.125% - over $29,750: 28%
Maximum Tax Rate on Long-Term Capital Gains: 20% - 28%
Under Reagan, maximum regular income tax rates decreased from nearly 70 percent to 28 percent, but these rates applied to lower income levels. The earlier rate applied to income over $215,400, while the later rate applied to people with income over $30,950.
In the mid-years of the Reagan administration, the regular income threshold for taxation at the maximum rate initially dropped to $85,600 in 1982, but by 1986 rose to $175,250.
The capital gains tax rate under Reagan started at 20 percent. By the time he left office, the capital gains rate had risen to the 28 percent rate that was in place at the end of the Carter administration.
George H.W. Bush
Marginal Tax Rate on Regular Income: Over $30,950: 28% - Over $86,500: 31%
Maximum Tax Rate on Long-Term Capital Gains: 28% - 28.93%
After his famed promise of "no new taxes," the maximum tax rates under George H.W. Bush increased for both regular income and capital gains.
However, as during the Ford, Carter, and mid-Reagan administration, the level of regular income that was taxed the maximum rate would increase from $30,950 to $86,500, causing fewer people to face that tax.
The capital gains rate would not decrease again until the Clinton administration, and the maximum regular income tax rate would not decrease again until George W. Bush entered office in 2001.
Bill Clinton
Marginal Tax Rate on Regular Income: over $250,000: 39.6% - over $288,350: 39.6%
Maximum Tax Rate on Long-Term Capital Gains: 29.19% - 21.19%
During the Clinton administration, the maximum regular income tax rate stayed the same for the highest earners, but the income level taxed at this rate increased by $47,350.
The maximum capital gains tax decreased by eight percentage points.
George W. Bush
Marginal Tax Rate on Regular Income: Over $297,350: 39.1% - Over $357,700: 35%
Maximum Tax Rate on Long-Term Capital Gains: 21.17% - 15.35%
George W. Bush decreased the regular marginal income tax rate for top earners by over four percentage points during his presidency, while increasing the income level for the highest tax bracket $60,350.
In addition, the highest capital gains tax rate fell near to its current rate of 15 percent.
Barack Obama
Marginal Tax Rate on Regular Income: over $372,950 - over 388,350: 35%
Maximum Tax Rate on Long-Term Capital Gains: 15%
The Bush tax cuts have remained through the Obama administration, with a 35 percent marginal income tax for the top income bracket and a 15 percent capital gains income tax. However, unless Congress acts by the end of this year, the 2001, 2003 and 2006 tax cuts will expire at the end of December 2012.
Again, the level of income necessary to face the maximum marginal income tax increased from 2009 to 2012.
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