[Guest post] What's Everyone Complaining About? Taxes on the rich are Low!

I've already explained how higher tax rates help businesses and churches, as they both have fundamental tax dodges that increase in value as taxes go up. Now I'll show that the federal tax rates on the elite "job creators" in the US are at historical lows. Of course, I know that I'm probably wasting my breath in this crowd. You all won't be happy till your favorite CEO gets his free stuff for free. But at least let me show you how they are getting their free stuff for really cheap. I'll also show that for a middle class wage slave, things aren't quite so good.

In a recent speech, President Obama pointed out that tax rates on the richest Americans are at their lowest rates in over 50 years. This statement is largely true. Between Reagan-Reagan and Bush, Bush-Bush, the tax rates at the high end have been pounded down. Check out this comparison of the "progressiveness" of federal taxation.

The difference between 1960 and 2004 is striking. Those in the upper five percent of income brackets used to pay dramatically higher total rate than everyone else, especially when considering estate and corporate taxes. Even individual and payroll taxes were more progressive. Keep in mind I'm talking progressivity here, so I don't want to hear any comments regarding absolute revenue numbers. Marginal rates are far more relevant when it comes to the argument that taxes dissuade entrepeneurs from expanding. Try to stay with me, OK.

It's also quite notable that those in the below 90% income categories had lower rates than today, especially payroll tax. I suspect most of the readers of this blog are in this sad range. Nowadays, the rates are pretty flat as a function of income, and generally higher than they were, especially at the low end. The flat tax the Steve Forbes' of the word have argued for is largely here, and consequently, the top echelons have little disincentive to increase their incomes, and the middle class shoulders an inordinately large burden of taxation. Of course, I'm sure I'll soon hear arguments from all you Ayn Rand fans that flattening out the progressiveness of the tax code was a Good Thing. We don't want to punish success. And believe it or not, I do agree with that. I do. Honest! I've read Atlas Shrugged -- even the long, boring speech at the end, and I get her point. And I get the tea party sentiment -- in general.

But the thing is, as somebody in that not-rich/not-poor middle land (was only kidding last post about being an elite tax-dodging job creator last post). The droopy middle zone in the sharply progressive 1960 tax rates look pretty good from where I'm sitting. I'd be willing to accept some of that comfort and let my dream of being a rich, undertaxed billionaire fade a bit, especially if the extra money "redistributed" from billionaires could help curb the deficit and preserve more of my own free stuff. You see, I've also read John Steinbeck and I like the idea that this country has a social safety net. Class warfare is a recurring theme in history and pushed to its extremes during tough times, things can get very ugly. I don't like ugly. I like coffee.

I can't be anywhere near as eloquent in explaining this point as the great historian Will Durant.

Personally, I favor the former rather than the latter.

Posted at 13:21 by Nadz   [/guest/nadz]   Comments | Perm Link |
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