August 4, 2009
Seven Myths About Taxing the Rich
- Myth: Raising taxes on the rich will close budget deficits; Truth: Increasing the progressivity of the income tax code by raising the top two rates will not close the deficit. In fact, it will lead to more revenue volatility, which will lead to larger future deficits.
- Myth: The rich do not pay their fair share; Truth: The top 20 percent of income earners pay almost all federal taxes.
- Myth: The income tax code favors the rich and well-connected; Truth: The bottom 50 percent of income earners pay almost no income taxes and the poor and middle-income earners benefit greatly from the tax code.
- Myth: It is all right to raise tax rates on the rich -- they can afford it; Truth: Just because someone can afford to pay higher taxes does not mean he should be forced to do so.
- Myth: Higher tax rates in the 1990s did not hurt economic growth, so it is all right to raise them to those levels again; Truth: High tax rates in the 1990s were a contributing factor to the 2001 recession and returning to those rates will damage the already severely weakened economy.
- Myth: The 2001 and 2003 tax cuts did not generate strong economic growth; Truth: The tax cuts generated strong economic growth.
- Myth: Raising the top two income tax rates will not negatively impact small businesses because only 2 percent of them pay rates at that level; Truth: Raising the top two income tax rates will negatively impact almost three-fourths of all economic activity created by small businesses.
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