Tax Brackets 2010

The United States first collected federal income tax on August 5, 1861 in order to pay for the war effort during the Civil War. However due to debates as to whether it was constitutional to tax income from properties owned it was impractical and discontinued until 1913. In that year the 16th  Ammendment was passed by Congress which says that Congress has the authority to tax income no matter what its source is.
 
Each year new tax brackets are released by the IRS. Tax brackets change based on inflation and other factors. The marginal income tax bracket depends on two things. The first is your income and the second is your tax-filing classification. Since 2008 the IRS made six tax brackets for income which go from 10% to 35%. There are four classifications which are determined by your marital status. You start out the calculation with total income (before taxes) and you take off any allowable deductions or personal exemptions and come up with a number that is your taxable income. FYI - an allowable deduction is an expense that is allowed by the IRS to reduce the taxes that you have to pay. A personal exemption is a calculation (per person) that is allowed to reduce your taxes in ways that are different from a deduction.
 
Did you know that in 1913 the top tax rate was only 7% on incomes over $500,000. During WW1 the top rate was way up at 77%. But, the income tax bracket rose to $1,000,000. I can’t imagine that too many people made that kind of money in those days. In 1939 the top rate was 75% on incomes over $500,000. During WWII in 1944-1945 the top rate was the highest ever. It was 94%  on income only over $200,000. And we complain about tax rates now?
 
Income ranges, or tax brackets as it is more commonly known as can tell a lot about a person’s financial status. If you tell someone what tax bracket you are in it tells them about your economic status. Or, if a person says “I want to raise my tax bracket” it means he/she wants to make more money. If a person says “I went down a few brackets this year” it means he/she is making less money. I suppose that it’s not so good to go up in tax brackets because then you have to give more of your hard earned money to Uncle Sam. No one wants to do that!
 
There are those in the United States who have been arguing in favor of (although without much success) a “flat tax”. According to Wikipedia the definition of a “true flat tax” is “ a system of taxation where one tax rate is applied to all income with no exceptions”. No exceptions for people’s income or for a business’ income. No one is subjected to preferential or “unfair” treatment. It sounds very fair and peace loving. But, I’m not sure if it’s “fair” that a person who makes $30,000 a year should pay taxes at the same rate as someone who  makes $1,000,000 a year . What do you think?