Monday, November 21, 2011

It's not about the revenue, it's about the punishment

Michael Barone has an interesting outline of how to raise tax revenue from the rich (and raising their average tax rate) without destroying the economy with high marginal tax rates: limit their deductions.  Although proposals like these were made by Republicans on the Supercommittee, they were rejected because the Democrats want high marginal tax rates rather than revenue.

Recall this telling exchange between then-Presidential candidate Obama and Charlie Gibson on ABC News: 
GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.
So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.
We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.