Tax rates


There was quite an outburst at the prospect of raising taxes for incomes over $250,000 a year. That’s radical, many said. “We’re running out of rich people,” said Michele Bachmann. “How Obama Will Bleed the Rich Dry” is the headline on Michael Gerson’s column this morning in the Washington Post.

The key point of fact is this: the Obama budget raises the tax rate on income over $250,000 a year from 35 percent to 39.6 percent.

Historically, that’s hardly radical. The top rate was over 90 percent during the 1940s, 1950s, and 1960s, and 70 percent during the 1970s. We never ran out of rich people.

Historically, what’s radical was Reagan’s reducing the top tax rate to 28 percent in 1986. Though there were tax cuts on high incomes, wage earners actually paid higher taxes under Reagan. Part of this project of lower taxes for the rich and higher taxes for wage earners was to teach wage earners to hate government by convincing people that higher taxes always hurt the little guy. That is just not true.

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