Tagged: economy

Net Worth Fighting For

U.S. Income Tax Brackets Over The Past Century

Did the onerous income taxes of the 1950s and ’60s affect the behavior of big-money boxers?  The Atlantic’s Henry Fetter believes so, as he explains in his recent article:

The 1950s was the era of the 90 percent top marginal tax rate, and by the end of that decade live gate receipts for top championship fights were supplemented by the proceeds from closed circuit telecasts to movie theaters. A second fight in one tax year would yield very little additional income, hardly worth the risk of losing the title. And so, the three fights between Floyd Patterson and Ingemar Johansson stretched over three years (1959-1961); the two between Patterson and Sonny Liston over two years (1962-1963), as was also true for the two bouts between Liston and Cassius Clay (Muhammad Ali) (1964-1965). Then, the Tax Reform Act of 1964 cut the top marginal tax rate to 70 percent effective in 1965. The result: two heavyweight title fights in 1965, and five in 1966. You can look it up.

The theory makes perfect sense, and yes, you read that right: back in the ’50s, the marginal rate of the uppermost individual Federal income tax bracket was indeed an incredible 90%!  In other words, after making a certain amount of money, nine out of ten of your hard-earned dollars went straight to the man.  If I had a demotivational font, I’d use it here to type “Ouch!”

In 1965, the top tax rate fell to 70%, and it stayed there until Reagan swaggered into the joint and knocked everyone on their asses.  By the end of his second term, as he gave a parting high five to Bush, he’d gutted the upper bracket to a millionaire-friendly 28% on all earnings over $160,000 – in today’s dollars!  Trickle down, baby!

Three decades later, the Gipper is long gone, but the tax code legacy of Reaganomics lives on.  To illustrate, Weather Sealed’s infographic team charted the historical U.S. income tax brackets for singles, adjusted for inflation, from 1910 to present:

U.S. Individual Income Tax Brackets, 1910-2010

U.S. Individual Income Tax Brackets, 1910-2010. Click to see it big!

The colors indicate the marginal tax rate: black for low, red in the middle, and yellow for high.  The horizontal axis is the tax year, and the vertical represents taxable income, log-scale, normalized to 2010 dollars with the Bureau Of Labor Statistics’ monthly CPI-U figures.  The bracket data comes from The Tax Foundation and the IRS, and the effects of Social Security, capital gains, AMT, and other tax varieties are not included.

Do you know a wealthy someone who’s afflicted by a habitual carping about their income taxes?  Get him or her near a computer, pull up this graph, point them towards the brilliant yellow-orange brackets that run from the Great Depression ’til the Reagan-Bush tag team, and they shall be healed!

Storing Your Value

Old-School Wealth Management

Suppose that you snapped.  It might have been the blood-red 401k statement that arrived in yesterday’s mail.  Or that last year, you paid your broker $10,000 to lose $100,000.  Or, perhaps, that while everyone else, by government largesse, refinanced houses, replaced clunkers, and recouped bad investments, you received nothing!  Except for a letter from the tax man.

Some Benjamin Franklins.

Some Benjamin Franklins.

So you went online, made a few phone calls, and faxed your John Hancock here and there.  And, lickety split, there’s a pile of $100 bills in the middle of the living room floor.  You cashed out!  Now, what to do next?

You considered the drastic options: the Insane Vegas Weekend, purchasing a yacht, giving it all to charity, etc.  However, that’s not you — it’d be best to keep a few bucks around to handle the obligations and save the rest for a rainy day.

Which means that your slug of cash needs a safe, secure hiding place. You could squirrel it away in the house — beneath the floorboards, inside a wall, under a mattress, etc.  But them thieves done seen all the TV crime dramas, and they know the usual stashes.  Besides, if your humble abode burns to the ground, your nest egg will go up in smoke, too.  Major bummer!

For the ultimate in cash protection, we need look no further than the masters of liquid wealth, the venerable Pirates.  A quick consult with Parakeet Pete yields the following solution:

Bury your booty in a hole, matey!

Which sounds like a fine idea, but there’s one important, missing detail:  What to bury, exactly?  The $100 bills?  The equivalent in gold?  Or something else?  What is the best store of value?

To help you determine the answer, I’ve created a table that details some of the most likely materials, including the price per pound, the quantity that’s worth $1,000,000, what to bury it in, and the pros and cons of each:

Stuff That You Might Put In Your Hole

Material Value Per Pound Size Of $1,000,000 Bury In Pros Cons
Wheat $0.09 190,000
bushels
subterranean silo never hungry bulky, mildew, mice, locusts
Moonshine $0.13 160,000
7gal stills
corked clay jugs many lovely banjo solos blindness
Gasoline $0.49 320,000
gallons
underground tank Peak Oil, baby! fumes, third degree burns
Ammo $2.10 525,000
shells
surplus ammo cans gun owners need you you need owners with matching gun
Vodka $7.80 1,800,000
shots
Russian-proof bear boxes the Bloody Mary requires V8 and Worcestershire
Jerky $18 27 tons duct-taped lawn bags infinite lifespan everything stinks like jerky
Cigarettes $57 7 pallets basement of abandoned 7-11 captive market nicotine stains
Guns $60 2,500
shotguns
water-tight firearm lockers reinforces Alpha Dog image ATF raids, terrorism indictment
Silver $270 3,700
pounds
rolling plastic totes Werewolves begone! not Gold
Caviar $2,400 1,100
servings
Arctic tundra endear yourself to power elite must ice or eat within 3 hours
CPUs $6,000 4,000
chips
sealed anti-static tray light weight, inert, brainy loses half of value every two years
Cocaine $9,000 50 kilos legs of faux llama keepsakes world-wide demand unstable customers, Scarface
Gold $16,500 275 bars,
100g each
treasure chest time-tested currency metal detectors, confiscation
$100 Bills $45,000 43″ stack mason jars backed by U.S. Government worthless beyond Thunderdome
Diamonds $175,000 black velvet
pouchfull
vault with lasers and trip wires profit, intrigue, girl’s best friend low utility, De Beers assassins
Plutonium $2,000,000 1.3 inch
sphere
argon-filled, lead-lined bunker ultra-compact CIA, critical mass, death by inhalation

Hope that helps!

ObDisclaimer: I am not a financial advisor, and this is not financial advice.  All prices approximately USD as of October 1, 2009.  Burying your life savings in a hole may incur risks, including, but not limited to, mold, worms, plunderers, and loss of map and/or principal.  Underground balance is not FDIC-insured.

Haiku For The Financial Meltdown

The Crash In 153 Syllables

Now that our little macroeconomic bobble is like, so totally “over,” I’d like to memorialize it with a grid of nine haiku (in non-rhyming 5-7-5 format):

Obama eases
fat cash for lemon Chrysler
Hyundai here I come
Goldman Sachs trader
once mastered the universe
hung by toenails soon
eviction notice
to refrigerator box
or parents’ basement?
systemic failure
food cigarettes guns ammo
not a wingnut see?
traffic seems lighter
underemployed “consultants”
booze and Judge Judy
dental agony!
root canal for “favors,” please!?
do it like that unghh
goddamned repo man
fed dog and took my plasma
smarter than I thought
line worker sobbing
fine Bangladeshi craftsmen
sewed hems of his pants
last storefront emptied
past midnight sneaking landlord
gas can in his hands

Print these out, store them somewhere safe, and show them to your grandchildren, as evidence of the trevails that you endured back in ’09!