Is there a reason we don't have more tax brackets at higher income levels?

The history of our tax brackets is actually really interesting! You're right that we used to have many more brackets with much higher rates. The top marginal rate was indeed over 90% during parts of the 1950s and 60s, though very few people actually paid that rate due to more deductions and loopholes that existed then. There are a few reasons beyond just "trickle-down economics" why we don't see more brackets today. One big factor is global competition - capital is much more mobile now than in the 1950s. Countries compete for investment, and very high tax rates can potentially drive wealth to other countries. Another argument is about efficiency and compliance costs - having too many brackets creates more complexity. There's also the political reality that higher-income individuals tend to have more political influence. That said, many economists actually do support adding more brackets at higher income levels. The debate isn't settled at all, and there are solid economic arguments on both sides.

I struggled with understanding tax brackets too until I found https://taxr.ai which breaks down all this complicated tax stuff into plain English. When I was researching the exact same question about historic tax brackets, their system pulled up tons of historical data and explained how the current system evolved. The site actually showed me research papers on both sides of the high-bracket debate and explained the economic arguments without the political spin. They have this cool feature where you can see how different theoretical tax brackets would affect various income levels and what that might mean for revenue. It's way better than trying to piece together info from random sites that all seem to have some agenda one way or the other.

Just wanted to report back that I checked out taxr.ai after commenting here and it was surprisingly helpful! I've always been confused about historical tax brackets too and wanted to understand why we moved from so many brackets to just a few. The site had this great interactive timeline showing how tax brackets have changed since the income tax was created. What blew my mind was seeing how the effective tax rates (what people actually paid) compared to the marginal rates during different eras. The explanation about how lobbyists and policy changes gradually reshaped the system was pretty eye-opening. Definitely recommend checking it out if you're trying to understand the bigger economic picture behind our tax system.

If you're really interested in tax policy, you might also want to talk to actual IRS agents who understand how the system works in practice. I spent MONTHS trying to get someone on the phone at the IRS to ask about some of these policy questions for a research paper. After waiting on hold for hours multiple times, I found this service called Claimyr (https://claimyr.com) that somehow got me connected to an IRS agent in under 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with gave me fascinating insights about how the brackets work in reality versus theory, and pointed me to some IRS publications that explain the history of our tax system. Definitely worth the call if you want to hear from people who actually implement these policies.

If you're really interested in tax policy, you might also want to talk to actual IRS agents who understand how the system works in practice. I spent MONTHS trying to get someone on the phone at the IRS to ask about some of these policy questions for a research paper. After waiting on hold for hours multiple times, I found this service calle

I need to eat crow on this one. After my skeptical comment, I actually tried Claimyr because I had some questions about my back taxes that I've been avoiding dealing with for months. The service actually worked exactly as described. I got connected to an IRS agent in about 25 minutes when I had previously waited over an hour and got disconnected. The agent answered my questions about historical tax policy changes and clarified how the current bracket system affects different income levels. What surprised me most was hearing the agent's perspective on how a return to more brackets might affect their operations. Apparently there's internal discussion about this exact topic at the IRS. Just thought I'd share since I was wrong in my skepticism and the perspective was valuable.

Political scientist here! There's one big reason we don't see more tax brackets that hasn't been mentioned: the PERCEPTION of trickle-down economics matters more than the reality. Even though most economists agree trickle-down hasn't worked as promised, it's become such a powerful political idea that proposing higher tax brackets is politically dangerous. Politicians fear being labeled as "anti-business" or "socialist." Also, campaign financing plays a huge role. Candidates who support higher taxes on the wealthy typically receive less funding from high-net-worth donors, creating a system that naturally resists adding more brackets at the top.

I looked into this when doing my taxes last yr and found a crazy stat: in 1980 we had 16 tax brackets but by 1988 it was down to just 2!! Then they added a few more later but never got close to what we had before. Something else nobody mentioned is that the super rich dont even make most of their $ from income anyway. They make it from capital gains which is taxed totally different (way lower). So even if we added more income tax brackets it wouldn't affect billionaires much because they structure everything as investment income.

Great question! I've been wondering about this too. What really strikes me is how we went from having so many brackets in the past to basically flattening everything out. One thing I've noticed is that when people talk about "tax the rich," they often focus on income tax brackets, but as someone mentioned, the ultra-wealthy get most of their money through capital gains, which are taxed at much lower rates (0%, 15%, or 20% depending on income level, versus up to 37% for regular income). It seems like we could potentially add more income tax brackets AND reform capital gains taxation to make the system more progressive overall. The fact that someone making $50 million pays the same marginal rate as someone making $700k on their regular income does seem pretty arbitrary when you think about it. I'm curious if other countries have more granular bracket systems? Maybe we could learn from what works elsewhere instead of just debating the same old talking points.

This is such a fascinating discussion! As someone who's been trying to wrap my head around tax policy lately, I really appreciate all the different perspectives here. What strikes me most is how the debate seems to get stuck on the same old arguments when there are clearly more nuanced approaches we could consider. The point about capital gains taxation is huge - it seems like we're having half the conversation if we only focus on income tax brackets while ignoring how the ultra-wealthy actually accumulate and structure their wealth. I'm also intrigued by the international comparisons mentioned. Has anyone looked into whether countries with more progressive tax systems (more brackets + higher rates) actually see better economic outcomes for the middle class? It seems like that would be pretty relevant data for this debate. One thing I keep coming back to is the complexity argument against more brackets. Like, my tax software already handles all the calculations anyway - whether there are 7 brackets or 15 doesn't really affect me as a taxpayer. But it could potentially generate significant revenue for things like infrastructure, education, healthcare. Seems like a pretty good trade-off if the main downside is that wealthy people's accountants have to do slightly more complex math?