Effective federal tax rate vs income with a 70% rate added once you hit $10 million

by hammertime84

 

Marginal tax rates and potential confusion around them have been in the news a bit lately. I’d never actually seen the effective rate and marginal rate plotted together this way and it worked out well.

I used the single-filer rates, and assumed the only deduction being used is the standard deduction. I also added in a 70% rate for incomes over $10 million since that’s been in the news also. I used matplotlib for the plot.

I have a related plot (take home pay after federal tax vs income) and some more discussion here:

www.somesolvedproblems.com/2019/01/how-do-marginal-tax-rates-work.html

Edit: Linear Scale

Scanning through the comments, a number of people asked about log scales. If you’re curious what it looks like with a linear scale, here you go:

View post on imgur.com

The total x range is much larger than the range where most of the interesting changes happen (i.e., below $1 million), so a linear scale doesn’t really work here.

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Edit 2: More Ticks

Here it is with more tick marks:

imgur.com/a49bzFv

I toyed with doing that initially, but:

  • I find the rotated values harder to read
  • I didn’t know how comfortable people would be with scientific notation to make the labels smaller

It is much easier to see where, say, $50,000 is with the extra ticks though so nice suggestion.