TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, August 1, 2008

Marginal Tax Rates and the Top .1%

Following up on yesterday's post on the new report from the Center on Budget and Policy Priorities, Income Concentration at Highest Level Since 1928:


(Hat Tip:  Thomas Greenaway, KPMG, Boston.)

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» How does the top 1%do? from Voir Dire
Very well, actually, and a lot better than in previous years, relatively speaking. The Center on Budget and Policy Priorities has posted some interesting analysis on its site regarding how the very well to do have faired vis-a-vis the rest of the crowd... [Read More]

Tracked on Aug 1, 2008 5:50:24 PM


What is it with these people who profess surprise or outrage that reported taxable income at the high end is highly responsive to tax rates? Are these the same people who are puzzled that crime rates are the lowest when prison populations are the highest?

The whole point of lowering tax rates was to capture additional tax revenue by persuading rich people to engage in and report more taxable transactions. CBBP appears to be unaware that it is agreeing with proponents of tax cuts!

Of course if maximizing revenue is less important than socking it to rich people, then a return to 90% rates is just the ticket. Revenue will plummet, and very few people will report a high taxable income. In other words, the rich will earn their income underground, for example by not selling appreciated assets.

Congress can then claim credit for reducing income inequality, conveniently ignoring the fact that reported taxable income is a very poor measure of true economic income for rich people. Congress will have put ice on the thermometer, damaged the economy to some extent, and cost the government revenue at the same time. A trifecta.

Posted by: AMTbuff | Aug 2, 2008 5:34:50 PM