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The 62% Tax Rate Problem

May 27, 2011 J

By: R.J. Moeller

In the latest in an incalculably long line line of acts that prove Democrats are less-than-serious about turning the US economy around, we learn this week that the top tax rate might soon be 62%.

From Stephen Moore in today’s Wall Street Journal:

Media reports in recent weeks say that Senate Democrats are considering a 3% surtax on income over $1 million to raise federal revenues. This would come on top of the higher income tax rates that President Obama has already proposed through the cancellation of the Bush era tax-rate reductions.

If the Democrats’ millionaire surtax were to happen—and were added to other tax increases already enacted last year and other leading tax hike ideas on the table this year—this could leave the U.S. with a combined federal and state top tax rate on earnings of 62%. That’s more than double the highest federal marginal rate of 28% when President Reagan left office in 1989. Welcome back to the 1970s.

Wow. Awesome. For such “progressive” people, the Left seems insistent upon returning America to the failed policies we learned don’t work 40 years ago.

First of all, the “rich” won’t pay such ridiculous rates. They’ll simply use tax shelters or, even worse, take their money out of the economy. They’ll stop investing, hiring, and starting new businesses.

Second, it is morally reprehensible for so many Americans to act as if they deserve more than half of someone else’s income. Liberals and pro-big government forces have been allowed to set the terms of this debate about tax rates for too long. Rich people “paying their fair share” would mean that we all pay the same rate and because they make more, rich people would pay more in total. That is fair. Nothing about the progressive tax system we currently have is fair. It’s re-distribution of wealth and immoral. Just because its legal doesn’t make it moral.

Stephen Moore closes out his important piece with this:

Perhaps there can still be a happy ending to this sad tale of U.S. decline. If there were ever a right time to trade in the junk heap of our federal tax code for a pro-growth Steve Forbes-style flat tax, now’s the time.

I couldn’t agree more, Moore.

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