Fun with Tax tables and spreadsheets

I have too much time on my hands and a spreadsheet so I thought I’d compute what we pay now vs. what Ryan’s plan (as near as I can determine) would have you pay, vs what Obama’s proposed changes to the tax tables would have you pay. Then for fun I found the old tax tables from 1950 (the “good old days” according to Conservatives) and adjusted the rate categories to today’s dollars based on the consumer price index (CPI). Maybe there’s a better index to use for converting 1950 dollars to 2011 dollars but I’m not an economist.

The spreadsheet I used for these calculations is attached so feel free to download it and fix anything I screwed up. Did I mention I’m not an economist or a mathematician?

I got interested in this because the GOP is getting marketing mileage out of Ryan’s plan with middle class and blue-collar conservatives. I was skeptical that the proposed adjustments would really benefit this group.  The calculations seem to bear that out.  Want to see a BIG change? Compare to the 1950 Federal tax tables! Paying that much tax might have even turned ME into a conservative.

Disclaimer #1. I’m a liberal, life-long proud democrat. That said, my spreadsheet as near as I can tell is a-political and doesn't know how to do liberal multiplication and addition.

Disclaimer #2: This is only analyzing the tax table changes alone. Obviously there is a LOT more to determining what you pay in anyone's plan.  If there wasn't, H&R wouldn't exist.

Disclaimer #3: I searched but I couldn’t find any specifics about Ryan’s proposed tax table other than that he wants the top bracket to be 25% instead of 35% and that he wants a simplified three-bracket table instead of our current six.  What I could not find is what the income ranges would be for the three brackets. So all I can do is assume they are the same as our current lowest three brackets.  For what it’s worth, unless you make crazy changes to his ranges, it really doesn’t make much computational difference to lower and middle class income earners.

I did all calculations using “Married Filing Jointly” tax brackets  I chose a range of household incomes from $40K to $250K (I think this covers middle income and blue-collar?) and then threw in a $750K earner to see how the changes might affect someone who has escaped the middle class and is almost rich.

Ryan’s proposed tables would eliminate the top 3 brackets so the top bracket would be the 25% one.   So if you earned $157K, only that last $20K would be taxed at 25% instead of 35%. A difference of $3000. Hey, if I made $150K, I’d be liking this!

(table below)

Obama’s plan maintains the six brackets but adjusts the income ranges upwards and sets the top bracket rate at 39%.

(table below)

Below is the result of the calculations.   For several different household incomes, it shows the federal tax using the 2010 tables, the Obama proposed new tables and the Ryan proposed new tables.  The "Change with..." columns show the difference from the existing 2010 table (ie: how much less or more you would pay).  At the right for fun is how wonderful things would be if it were 1950 again.

The obvious (to me) conclusions are:
1. until you make much more than a quarter million a year, these variations don't really affect you significantly.  You're making out better with Obama's plan until you start earning over 150K.  From a quarter mil on up, things get better and better for you under Ryan's.

2. The good old days sucked (at least when it came to paying taxes)

taxable income (married file jointly)	2010 tax	Ryan’s Plan ( top bracket at 25%)	Obama’s Plan	Change with Ryan’s plan	Change with Obama’s plan	1950 tax(adj for CPI)	Change with 1950 (adj for CPI)
$40,000	$5,163	$5,163	$5,148	$0	-$15	$7,055	$1,893
$60,000	$8,163	$8,163	$8,148	$0	-$15	$10,440	$2,278
$80,000	$12,363	$12,363	$12,218	$0	-$145	$15,328	$2,966
$100,000	$17,363	$17,363	$17,218	$0	-$145	$19,729	$2,367
$120,000	$22,363	$22,363	$22,218	$0	-$145	$24,263	$1,900
$150,000	$30,244	$29,863	$30,022	-$381	-$222	$57,499	$27,255
$200,000	$44,244	$42,363	$44,022	-$1,881	-$222	$73,962	$29,718
$250,000	$60,281	$54,863	$59,178	-$5,419	-$1,103	$93,361	$33,080
$750,000	$232,808	$179,863	$253,263	-$52,946	$20,455	$365,806	$132,998

There's much more to the whole story, but as far as how these tables are structured, It sure looks to me like the GOP is getting support for this from a base which it will simply not help.

What’s with 1950?
The top tax bracket in 1950 was EIGHTY freeking percent! I gave up with the numbers at around 62% (was tired of doing all the CPI conversions). One thing for sure in 1950 - rich people really got the shit taxed out of them! Every income range got taxed more but just look at what the equivalent of our $750K earner would have paid back then. Now THAT’s something to bitch about (and he’s not even rich!).

I found the 1950 tax brackets here:

http://www.stanford.edu/class/polisci120a/immigration/Federal%20Tax%20Brackets.pdf

Here is the current 2010 Federal Tax table.

2010 Tax Table (married Filing Jointly)

$0  up to $16,750 rate = 10%

$16,750 up to $68,000 rate =15%

$68,000 up to $137,300  rate = 25%

$137,300 up to $209,250 rate = 28%

$209,250 up to $373,650 rate = 33%

$373,650 and up rate = 35%

Ryan proposed Tax Table (top bracket is 25% - assuming ranges stay the same)

$0 up to $16,750 rate = 10%

$16,750 up to $68,000 rate = 15%

$68,000 and up rate = 25%

Here is the change proposed by the Obama Administration.

$0 up to $17,050 rate = 10%

$17,050 up to $69,300 rate = 15%

$69,300 up to $139,850 rate = 25%

$139,850 up to $235,550 rate = 28%

$235,550 up to $280,500 rate = 36%

$280,500 and up rate = 39%