Americans are paying the smallest share of their income for taxes since 1958, a reflection of tax cuts and a weak economy. . . . The total tax burden — for all federal, state and local taxes — dropped to 23.6% of income in the first quarter, according to Bureau of Economic Analysis data. By contrast, individuals spent roughly 27% of income on taxes in the 1970s, 1980s and the 1990s — a rate that would mean $500 billion of extra taxes annually today, one-third of the estimated $1.5 trillion federal deficit this year. . . . Individuals paid taxes at an annual rate of $10,549 per person in the first quarter — about the same as individuals have paid since 1990 when adjusted for inflation. Incomes have grown; tax payments haven't.
From USA Today via the Tax Profs Blog.
The top income tax rate in 1958 was 91% (where it remained from shortly after World War II until 1964). At the time, the nation was running under the recently overhauled Internal Revenue Code of 1954, which was revised, in part, because of budget surpluses run by the federal government in 1948, 1949 and 1950 (the Korean War soaked up surpluses in the following years). There was also a gift and estate tax regime in place in 1958 which was less generous (and more complicated) than the one in place as of 2011.
In contrast, the top federal income tax rate in 2011 is 35%, and for most long term capital gains and qualified dividends the top federal income tax rate is 15%. Thus, in addition to a low aggregate tax burden by historical standards, top marginal tax rates are also low by historical standards. It is also easier given the state of transportation and telecommunications technologies to relocate to a low tax state now to minimize state and local tax burdens than it was to do so in 1958.