Hillary & Bernie, Tax Fantasists
Soak-the-rich proposals ignore history and wouldn’t raise nearly enough money to fund big spending plans. http://www.wsj.com/…/hillary-bernie-tax-fantasists-14592068…
Highlights
"The effective tax rates actually paid by the highest income earners during the 1950s and early ’60s were far lower than the highest marginal rates. Few taxpayers reached the top brackets, the code was rife with loopholes, and capital gains were taxed at much lower rates."...Suppose a President Clinton or Sanders tried to raise effective tax rates paid by a significant number of upper-income earners through very high top rates. What then? Real damage, according to Mr. Piketty. In a 2009 debate with the Cato Institute’s Chris Edwards in the Economist, Mr. Piketty said, “I firmly believe, that imposing a 70% or 80% marginal rate on large segments of the population (say, 25% of the population, or even 10%, or even a few percentage points) would lead to an economic disaster.” In other words, sayonara increased tax revenue.
Soak-the-rich proposals ignore history and wouldn’t raise nearly enough money to fund big spending plans. http://www.wsj.com/…/hillary-bernie-tax-fantasists-14592068…
Highlights
"The effective tax rates actually paid by the highest income earners during the 1950s and early ’60s were far lower than the highest marginal rates. Few taxpayers reached the top brackets, the code was rife with loopholes, and capital gains were taxed at much lower rates."...Suppose a President Clinton or Sanders tried to raise effective tax rates paid by a significant number of upper-income earners through very high top rates. What then? Real damage, according to Mr. Piketty. In a 2009 debate with the Cato Institute’s Chris Edwards in the Economist, Mr. Piketty said, “I firmly believe, that imposing a 70% or 80% marginal rate on large segments of the population (say, 25% of the population, or even 10%, or even a few percentage points) would lead to an economic disaster.” In other words, sayonara increased tax revenue.
Even without disaster, however, it is unclear whether higher rates on the upper echelons of the top 1% would bring in more revenue. I’ve compared the Piketty-Saez estimates of average federal income-tax rates paid by the top 10th of the top 1% with the revenue collected at the federal level from the same group. The result? From the mid-1960s through the ’80s, trends in the average tax rates paid at the top compared with their tax revenues are mirror images. When average tax rates went up from 27.6% in 1965 to 34% in 1975, revenues went down, from 0.6% to 0.5% of the sum of GDP plus capital gains. When average tax rates declined to 23.7% over the second half of the 1970s and the ’80s, tax revenues from the top went up, reaching 0.8% of GDP plus capital gains in 1990."
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