Taxes Are Worse Than You Thought

‘It is a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates.’
– John F. Kennedy (Yes, a Democratic president back in the Camelot days of the early ’60s wanted to slash taxes.)
This week’s Outside the Box will make half of my readers indignant and the other half feel righteously vindicated in their thinking. I have no idea which half you are in. What is so controversial? Who pays taxes and why they should.
Today’s letter was sent to me by reader Tom Bentley. It bears the in-your-face title ‘Taxes Are Worse Than You Thought.’ It’s by Mark J. Perry, whose bio tells us that he’s a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan. So yes, he is a conservative.
The point Mark is trying to make is that the top 1%/5%/10% are already paying the bulk of the income tax. From his viewpoint that is fair, or even more than fair. Although I will point out that he does include a chart which shows that the progressivity of tax rates, which climb relentlessly upward with income, surprisingly fails at incomes of over $10 million. I assume that is because at that point capital gains tax and other tax-incentivized income comes into play that is typically not available to those of us with merely mortal incomes.

This post was published at Mauldin Economics on APRIL 21, 2017.