Nov 15, 2012
Stephen Moore traces a history of tax RATE changes in the 20th Century in Why Lower Tax Rates Are Good for Everyone in The Wall Street Journal.
The country needs an economy that will create more of the “millionaires and billionaires” that Mr. Obama loves to excoriate, not more taxes from those who already exist. Total taxes paid by millionaires fell by almost $100 billion between 2007 and 2010, the last year with statistics available from the Internal Revenue Service. The drop resulted not from too-low tax rates, but from the severe recession and an anemic recovery since 2009 that thinned the ranks of the wealthy.
If Mr. Obama wants the Warren Buffetts and Justin Biebers to shoulder more of the nation’s tax burden, he would do well to pay attention to the history of tax rates. Over the past century, lower rates have shifted the tax burden onto high-income earners and away from the middle class while maintaining the tax code’s progressivity.
The irony is that the more progressive our taxes become the more the government is dependent on the wealthy to fund their programs, and the more sensitive our tax revenues and the economy become to anti-growth fiscal policy. If the tax base was broader the revenue stream would be more stable and less dependent on the wealthy.