100 years of tax brackets, in one chart

The US currently has seven tax brackets — and some Republicans, including House Speaker Paul Ryan, think that’s too many.

In fact, it was a common talking point for Republicans throughout the primaries. President-elect Donald Trump said early on that he wants to cut the number to three, and same with Jeb Bush and Chris Christie. Marco Rubio wanted just two. And Ted Cruz, Ben Carson, and Rand Paul expressed interest in a flat tax for everyone.

Generally, politicians want to reduce the number of brackets because they believe it will simplify the tax code. That said, tax brackets are among the easiest parts of the tax code, thanks to modern software and, well, math. The other rationale — held by Carson — is that having different tax rates based on income is socialism, which is why he supports a flat tax.

But as the graphic above shows, the US has historically taxed the very wealthy more than the somewhat wealthy — and way more than the middle class. In the 1960s, the tax brackets on the high end started to disappear, and during Ronald Reagan’s presidency we went down to just two brackets. That meant that many middle-class citizens were in the same tax bracket as millionaires.

Since the beginning of Reagan’s term, wealth inequality has been on the rise — with the gap between the top 0.1 percent and everyone else, including many quite affluent families, growing.

More tax brackets aren’t necessarily a good thing, but bracket reduction does violate the basic concept of progressive taxation. Cutting back to two adds a bit of simplicity, but also means there are huge ranges of incomes that are taxed the same.