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Monday, October 17, 2011

Taxing the rich - interesting article in Christian Science Monitor

Saturday's Christian Science Monitor had an extensive story on the current news item about President Obama's proposal on increasing taxes on individuals with very high income. See "Tax the rich: Should millionaires really pay more?" by Jessica Bruder (10/15/11). The article provides a variety of perspectives on the issue including some of the Wall Street protesters and some wealthy individuals. It also notes that some high income individuals in France and Germany are asking their governments to raise their taxes.

Former Labor Secretary Robert Reich is quoted as saying that the current issue is not just an economic one, but also a moral one. The article also refers to IRS data indicating that the top 400 income generators had an average tax rate of about 18%.

I encourage you to read the article - it is objective and raises a variety of things to think about in the real question of tax equity - how much should people at different income levels pay in tax.

My last post noted that 10/22/11 is the 25th anniversary of the Tax Reform Act of 1986. That Act resulted in two individual tax brackets - 14% and 28% with capital gains taxed the same as ordinary income. Today, most capital gains and dividends of individuals are taxed at 15%. Meanwhile, other income can be taxed as high as 35% (39.6% after 2012; and even higher due to some phaseout rules).

Perhaps the TRA86 structure with lower ordinary income rates and a broader base and fewer tax credits should be re-examined.

I am quoted in the CSM article noting that ideally tax reform should be non-partisan. Let's look at principles of good tax policy in identifying where improvements are needed. I also observe that any good tax change is challenged today when lawmakers are combining tax reform, deficit reduction and economic stimulus together.

What do you think?

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