Does Jay Severin know his tax history?

Jay Severin has complained about many things during his 10+ years on Boston radio, but by my reckoning his most frequent and vociferous rants are about how much he pays in taxes. (“Half my money,” he often remarks.)

Using the historical tax calculator from USA Today, we can get some idea of how much Jay is paying in taxes now compared to what he might have paid at the same relative income level in years past. The calculator only provides information for single filers using the standard deduction and one exemption, so it probably overstates how much Jay is or would have been paying in taxes. On the other hand, the calculator does NOT take the Alternative Minimum Tax into account, so it’s possible that there’s some understatement as well.

It’s been estimated that Jay makes $1,000,000 a year, but let’s play it very conservatively and say that after all the trouble he’s gotten himself into, he makes only $500,000.

In 2010, Jay’s effective federal tax rate will be 33%. That includes federal income tax, Social Security tax, and Medicare tax. He’s in the 35% bracket – every dollar he earns over $490,700 is subject to 35% income tax plus 1.45% Medicare tax. (Wages above about $108,000 are NOT subject to Social Security tax.) If he were making $1,000,000 his effective tax rate would be higher, but not much higher: 35%.

What if we rolled the clock back? Things were better before the Great Society, right? So let’s go all the way back to 1951, the year Jay was born. Adjusted for inflation, Jay’s salary back then would have been $60,024, and his effective tax rate would have been only … 59%. That’s right. Sixty years ago, Jay would have been paying 24 percentage points MORE in taxes than he’s paying today. And his marginal tax rate would have been not 35%, but 75%.

I’m sure Jay wouldn’t want to go back to 1951’s tax rates. After all, Democrat Harry Truman was still President then. How were things in 1960, after eight years of Eisenhower? He would have been making about $68,335. And sure enough, his effective tax rate would have gone down. From 59% to 58%. And he’d have bumped up into the 78% bracket. Funny, but I don’t remember Ike being called a Socialist or Communist.

So it’s not 1960 that Jay longs for, either. It turns out, in fact, that the only years since World War II in which Jay would have had a lower effective federal tax rate were 1988 – 1992, when they bottomed out between 29% and 31%. And during those four years, George H. W. “Read My Lips” Bush decided that they had to go up again.

So the next time Jay complains about his federal tax bill, I hope someone asks him exactly when he thinks tax rates were reasonable. I’d love to hear the answer.

Now it’s true that the federal government spends a lot of money on things today that it didn’t spend money on in 1951 or 1960. But would Jay’s taxes go down if we stopped spending money on “bastard factories in Newark” or “turkey basters for lesbians?” History suggests otherwise.

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