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Originally Posted by raymr
That's a nice chart, but it only covers the last 30+ years. I suspected that if you actually go back 40 or 50 years, the effective rate on top income earners would be double what it is now, and I was right:
http://www.cbpp.org/cms/?fa=view&id=106
Granted the site is biased, but I suspect neutral sources would show similar figures. Hence, its little wonder that the top 2% want to hold on to their ultra low tax rates, despite the country's budgetary pressure on necessary SS and medical. There is a historical precedent for higher effective rates.
There are many indicators that the socioeconomic fabric and average living standard started to decline in this country during the 1970s. Coincidence? |
Say we raise taxes on the Top 2% to 60-70-80% of their income. Then what do we do when that revenue barely makes a dent? We move down to the Top 3%, same result. At the Top 5% you're already into non-"millionaire" territory and there still isn't enough revenue to keep up with expenditures. So it becomes Top 10% and you're into middle class territory. And so on.
Sure the Top 2% has a lot of power. But the support for holding taxes comes from a lot further back in that pecking order. It's not that there's support for the "super rich" for those opposed to increasing taxes, it's that they know they're next in line when there's still not enough revenue coming in since every expenditure, including defense, has become an entitlement and there's no will to cut them.
From the Wall Street Journal (I know, I know. If you've got a different source that claims otherwise, I would love to see them.):
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A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
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