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Tuesday, October 15, 2013

For Today's Millionaires: A Tax-Time Bargain

Following up on my prior post on Tracey M. Roberts (Seattle), Brackets: A Historical Perspective, 108 Nw. U. L. Rev. __ (2014):

For Today's Millionaires: A Tax-Time Bargain (Too Much: A Commentary on Excess and Inequality):

Comparing tax rates on the rich over time can be tricky. Any era's top tax rates only tell part of the story. What matters just as much: at what level the top rates go into effect. Tax scholar Tracey Roberts has just calculated the actual tax rate America's ruch have paid, over the years, on their miilionth dollar of income:

Roberts

http://taxprof.typepad.com/taxprof_blog/2013/10/for-todays-.html

Scholarship, Tax | Permalink

Comments

"What matters just as much: at what level the top rates go into effect."

What matters even more: Whether the rate in question is optional or mandatory.

Pre-1987 ordinary income tax rates are not directly comparable to post-1987 tax rates. Before the 1986 Tax Reform, millionaires and others could shelter all their income from taxation by owning rental property. That made the high tax rates optional.

The old optional high rate was a better deal for most millionaires than today's lower rate which is impossible to avoid. (Tax-exempt bonds incur an effective tax in the form of reduced interest rates.)

Posted by: AMT buff | Oct 15, 2013 10:50:23 PM