The IRS tax code was quite different in the 1980’s versus today!
The streaming video service Netflix has earned a reputation for providing quality content like Narcos, Orange is the New Black, and The Queen. But Netflix has also upended how millions of people consume television. How have they done that? By dropping an entire season’s worth of a series all at once, letting you “Netflix and chill” with a single episode or binge for an entire weekend. (What kind of savage network would make viewers wait an entire week between episodes of their favorite show? HBO, that’s who.)
Netflix’s latest hit, which dropped its second season last month, is Stranger Things, a love letter to the classic horror, sci-fi, and fantasy films of the 1980s. The show features a pack of bike-riding preteen friends from sleepy Hawkins, Indiana, who team up with the local sheriff and a mysterious paranormal girl named Eleven. Together, the motley crew fights to save the world from a parallel universe that connects through the super-secret “Hawkins National Laboratory.”
Most Stranger Things viewers love the show’s music and movie references. Naturally, it makes us nostalgic for 1980s taxes. (Have we told you we need to get out more often?) So, for all you “Upside Down” fans, let’s take a walk down memory lane and see what taxes looked like when it was “morning in America”:
- The ’80s opened with 15 tax brackets topping out at 70% for joint filers reporting $215,400+ in taxable income (roughly $683,000 in today’s dollars). In 1981, Washington dropped the top rate down to 50%, and the Tax Reform Act of 1986 condensed the whole shebang into just two brackets topping out at 28%.
- Tax shelters were big business! If you didn’t feel like giving Uncle Sam 70% of your last dollar of income, you could buy limited partnership interests in all sorts of activities, including oil and gas programs, real estate syndications, cattle feeding schemes, aircraft and equipment leasing deals, and “master recording disks,” whatever those were. Nobody “invested” in these boondoggles because they made business sense; they were all about the tax losses.
- You could report your dependent children on the honor system, without supplying Social Security numbers. This led to millions of people fraudulently claiming deductions for nonexistent children and even household pets. (Don’t just love them like family . . . deduct them like family!)
- You could disappear from the office like Don Draper for a three-martini lunch and write off 100% of the cost, versus 50% today. (As former President Gerald Ford put it in a 1978 speech, “Where else can you get an earful, a bellyful, and a snootful at the same time?”)
- You could deduct interest you paid to buy almost anything except tax-free bonds. Want one of those little Japanese cars that were just hitting the market? How about your first “personal computer”? What about a microwave oven or VCR? You could deduct interest you paid to buy all of them.
Here’s something to think about as you sit down for season two of Stranger Things. The shadow monster, demogorgons, and The Upside Down are all just make-believe — but the risk of overpaying your taxes is very real. So don’t fight your way out of a creepy government lab — or scary IRS tax code — all by yourself! Call us for a plan and we’ll guide you to safety!