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94%! How Tax Rates Have Changed Throughout History

People always complain that their taxes are too high. But in the past, there's been a wide range of tax rates, some lower, some much higher than current levels.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at information that CPA Select gathered about the history of the tax code. Dan notes that when the income tax was first added to the Constitution in 1913, rates ranged from 1% to 7%, but they quickly soared to a maximum of 77% during World War I. After that, top rates fell to 25% during the inter-war era, but when the Depression and World War II hit, rates rose and eventually hit a high of 94%. Dan goes on to discuss the Tax Reform Act of 1986 and its huge impact, cutting tax rates but also eliminating deductions that most taxpayers relied on to avoid paying former high rates. Dan concludes that it'll be interesting to see whether tax reform takes the same course going forward, with lower rates but fewer available tax breaks.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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