TaxProf Blog

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

Friday, August 27, 2010

Do We Need a Tax Bracket for the Super-Rich?

Huffington Post, Do We Need A Tax Bracket For The Super-Rich?:

Should someone who makes $400,000 a year pay the same effective tax rate as someone who makes $40 million a year? In a recent CNBC spot, two analysts took up the debate, which has taken on a new urgency as lawmakers and pundits ponder the Bush tax cuts and the mounting Federal deficit. ...

In the CNBC spot, Michael Linden, an expert at the progressive think-tank the Center for American Progress, argued the U.S. should add income tax brackets for those making $1 million, $5 million and over $10 million a year. While Daniel Mitchell, a fellow at the conservative think tank the Cato Institute, said the super rich should pay the same tax rate as the moderately rich, the middle class, even the poor.

(Hat Tip: Francine Lipman.)

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I wonder what percentage of the public agrees with charging very high tax rates (70% or more) on the highest incomes as a matter of fairness, even though these rates lose revenue by reducing reported taxable income in the top bracket. I'd bet it's at least 10% of the public, possibly even 20%. These are the people who have envy as a major part of their utility function. I'd bet that it's more than 50% among those who study income inequality.

Posted by: AMTbuff | Aug 27, 2010 7:23:03 PM