The GOP has frozen progress in Congress over a measely 4.6% tax increase on NET INCOME over \$250,000.  All agree to leave the Bush Tax Cuts in place on all NET INCOME for \$250,000 and less.   Not 46%, no.  4.6%.  The Republican Party in both the House and Senate has blocked so many bills in order to protect their wealthiest consitutents from having to pay a measely increase of 4.6% only on income that EXCEEDS \$250,000.

Why isn't the Democratic Party clearly broadcasting this FACT?

For an example, let's look at Constituent A, who earns a salary that produces a NET INCOME, after all the allowable deductions and tax code complexities are factored in, of \$500,000.

Currently, Constituant A pays the Bush Tax cuts on his/her entire NET income.

If President Obama's plan passed, Constituent A would only be taxed an additional 4.6% on NET Income over \$250,000.  In short, Constituent A would pay 39.6% instead of 35% on the second \$250,000.  Let's do the ARITHMETIC:

The tax on Constituent A's NET Income would remain the same for first \$250,000.

Under the Bush Tax rate of 35%, Constituent A would pay 35% on \$251,000 - \$500,000.

The Arithmetic for Bush Tax Cut:

35% x \$249,000 = \$87,500

Under the Democratic Plan, the tax would increase by a measely 4.6% to 39.6% on the amount in excess of \$250,000 or, in this case, on \$249,000.

The Arithmetic for Democratic Tax Increase on Net income over \$250,000:

39.6% x \$249,000 = \$98,604

The tax increase for Constituent A with the measely 4.6% tax increase would be:

\$98,604 - \$87,500 = \$11,104

If you divide the tax increase, \$11,104 by NET Income of \$500,000 you will find that this increase is only a 2.2% of income increase paid to the USA.  In short, how can anyone argue that a 2.2% of income increase of tax, in this case, is burdonsome?  Don't all Americans have to chip in to reduce the debt?  To do their fair share?

Granted, there are lots of tax details in this simplified presentation, most of which address income under \$250,000; however, the majority of the grid lock in Congress stems from this measely 4.6% increase on income over \$250,000.  Period.

Even Adam Smith agreed that "to whom much is given, more is required" to paraphrase

MY DREAM would be a return to truly progressive tax rates with many more levels like we had until Reagan took office.

The rates were progressive, even for different levels of wealth.  Simplifyng the tx code by reducing the income divisions makes the tax code less progressive, imo.

Here's a simplified chart depicting the high earner tax rates over the years:

DO WE ALSO FORGET TO EMPHASIZE THAT, when taxes are cut, deficits rise?  Here's a chart showing the tax rate history on the highest earners:

Here's a deficit chart where you can see the deficits rising when tax rates, shown above, decrease:

We can improve our framing of this important issue.

There is a lot of misinformation being circulated, primarily to make sure the public remains confused.  The GOP are so much more diligent and unified in their messaging.  Granted most of their messaging is false, but they have the Hitler thing down very well.  A big lie repeated can become a truth perceived (paraphrased).

Here'e are some examples of misinformation:

TAXES:  CLINTON VS BUSH from Snopes

Ezra Klein on Clinton-Era Tax Rates from National Review

Here's an article that does a pretty good job summarizing the years of this debate:

At the NYTimes link, you will find a 2010 chart link that demonstrates how much the Bush Tax Cuts saved each income level.

Can Democrats let their independent or undecided voter friends know that the big debate about ending the Bush Tax Cuts for the top income earners is really only about a measely 4.6% increase?

I hope so.

How is it that the GOP gets away with their head-spinning, lie spinning anti-tax debate about a measely 4.6% increase on the wealthy message?

GOTV

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#### Comment Preferences

• ##### Tip Jar(7+ / 0-)

It's difficult to be happy knowing so many suffer. We must unite.

• ##### So many things wrong with this diary(6+ / 0-)

This is just wrong:

Currently, Constituant A pays a 35% income tax on the entire NET INCOME or \$175,000.

A top marginal rate of 35% just means that you pay that 35% on income above where that top marginal rate starts.  That sentence is just wrong.

Second, most of those high income earners are subject to the Alternative Minimum Tax, which means they pay an EFFECTIVE rate (which is far more representative of what people pay) of 26% to 28%.

Third, your listing of top marginal rates is completely misleading, because it doesn't take into account two things:  (1) where those top rates started (nowhere NEAR \$250,000 in today's dollars, more like 10 times that in today's dollars); (2) more importantly, what income was subject to those rates and what income was subject to exemptions/deductions/shelters. The Tax Reform Act of 1986 changed that so, so much that most honest discussions of tax rates recognize that it is impossible to compare marginal rates before and after -- it's apples and oranges.  The only reason that Eisenhower 90% rate was palatable in Eisenhower's day was (1) it started on Adjusted Gross Incomes over what would be millions in today's dollars; AND (2) there were so many deductions/exemptions/shelter that, even for the very rich, they paid that 90% on a much smaller portion of their income.

Much, much, much more honest is to look at EFFECTIVE tax rates -- how much each income level actually PAYS in federal income taxes. (That's why the "Buffett Rule" is couched in terms of a 30% EFFECTIVE rate rather than any marginal rate.)  Look at the SECOND chart here, which addresses federal individual income taxes.  The top 1% paid the highest effective rates under Clinton -- even MORE than they did when that top marginal rate was 70%.   Fpr incomes from, say \$250,000 to \$1 million in today's dollars, Clinton tax rates probably were the highest ever.

If you want to have a tax debate, you at least need to stick to facts to have credibility.

• ##### You are right.(5+ / 0-)
Recommended by:
ozsea1, War on Error, jayden, raincrow, Sue B

But the diarist's main point, which is that a ~5% increase on marginal rates for incomes over \$250K would not be a big deal even for those people who'd have to pay it, is correct. A lot of people I know (who make 400k-2M or so) are petrified of a tax increase, but the reality is that this wouldn't affect their lifestyles one iota. More importantly, it wouldn't materially affect decisions they make on whether or not to invest in or start businesses. That claim by the GOP is just hooey.

• ##### Well, this "main pont" is wrong, too(5+ / 0-)
MY DREAM would be a return to truly progressive tax rates with many more levels like we had until Reagan took office.
So, so, so many times I see people here saying, that \$250,000 to \$1 million group shouldn't complain about going back to Clinton rates -- what if we were saying go back to pre-Reagan rates (like this diarist.)  People don't realize that, on this group, Clinton rates were HIGHER than pre-Reagan rates.

In my mind, the question is not only how much somebody can "afford" to pay.  Clearly, a working professional couple with 2 kids making \$500,000 can "afford" to pay a huge amount - you could say  that they can "afford" to pay \$400,000 in federal income taxes, because a family of four ought to be able to survive fine on \$100,000 a year.

But would such a federal income tax rate be fair to people who are going to work every day to earn that?  Would it be fair for a doctor, who invested a decade in schooling to get where he is, to pay an effective rate of 80%?

Put it another way, how many hours a day should someone have to work just to pay federal individual income taxes?  An effective tax rate of 25% means that, for every 8 hour workday for that doctor, two of those hours are to pay his federal income taxes -- not counting Medicare, SS, and state income taxes.  I don't think you can go much higher than that on people who work for a living, but are very well paid.

Me, I'd prefer not a simple increase in top marginal rates but an elimination of deductions/exemptions for high income earners so that the top 1% actually paid that higher EFFECTIVE tax rates, but everybody in the top 1% paid it, not just those who couldn't find the exemptions and deductions.

• ##### Doctors have huge deductibles(0+ / 0-)

not the lease of which is Malpractice insurance.

So, I don't think we can look at a day and say the Doc pays 2 hours of work a day.

Now, this rule does apply to the low wage worker who has few deductions, other than children.

But we always forget to mention that 50% of Americans are single, and many of those don't have kids, so

Single, childless workers pay the highest tax rates.  Is that fair?

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### Because business income is only (1+ / 0-)
Recommended by:
freedomalliance

net income (what you make after deducting expenses), yes a doctor who pays an effective tax rate of 25% is paying 1/4 of the income from his practicing medicine in federal income taxes if he has an effective tax rate of 25%.

A doctor's income is what he makes after paying the business expenses (his office rent, his nurse, his malpractice insurance) that allow him to practice medicine.  No doctor views his personal income as the gross number before he subtracts those things.

If AFTER his business expense deductions (the expenses that allow him to make money) a doctor makes \$400,000 a year, and pays \$100,000 of that in federal individual income taxes, then yes, he is working 2 hours a day (in an eight hour day) to pay federal individual income taxes.

And many of those people in the \$250,000 to \$1 million range already pay an effective rate of 26% to 28% due to theAlternative Minimum Tax.  Rather than raise the rates on that group even more, a far better solution would be to restructure the tax code so that everybody in that income group pays roughly the same effective tax rate.  It is also not fair that one working professional couple with AGI \$400,000 pays an effective tax rate of 28% (\$112,000) and another working professional couple pays an effective tax rate of 15% (\$60,000).  Rather than raise the rates on couple 1 even higher, we ought to flatten it out so both pay an effective tax rate of, say, 23 - 25% (back to around the Clinton rates), with incomes over \$1 million increasing to an effective tax rate of, say 30% (the Buffett Rule).  That's far better than simply raising top marginal rates (as the President suggests).  If all you do is raise top marginal rates, you exacerbate that situation where people's effective tax rates are vastly different regardless of having roughly the same income.

If you want to see historical effective tax rates for ALL federal taxes (including SS and Medicare taxes, and capital gains taxes), look at the FIRST chart here.

• ##### Respecfully(1+ / 0-)
Recommended by:
War on Error

your framing does its best to inform, but comes across as defensive;
and, to be honest, overstated.

Perhaps it's better to redirect the conversation to online resources that detail the marginal-effective tax rate discussion in a more persuasive manner.

"No man is rich enough to buy back his past." ~ Oscar Wilde

[ Parent ]

• ##### I do get a bit frustrated(3+ / 0-)

because as you note, I've pointed out these fallacies before, including in articles where this particular diarist was a participant, I think.

Yet people persist in the fallacies about things like marginal tax rates, whether we should "return" to pre-Reagan rates, things like that.

You can't criticize Republicans for not having an honest discussion about taxes, and then post things like this, which itself is not an honest discussion about taxes.

• ##### The 'taxing' subject(2+ / 0-)
Recommended by:
coffeetalk, War on Error

appears deceptively, and in the example of the msm, seductively simple.

We know that it is not.

Tax education should be introduced as another example of "story-problems" in eighth grade algebra classes, having the students work on the marginal vs effective tax rate problems from that angle.

The history and political philosophy of taxation should be addressed in American government class. Start introducing the kids to pre-law, while we're at it.

Dreamin', I know.

"No man is rich enough to buy back his past." ~ Oscar Wilde

[ Parent ]

• ##### Corrected diary. Thanks(1+ / 0-)
Recommended by:
ozsea1

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### Thank you, I corrected the diary.(1+ / 0-)
Recommended by:
ozsea1

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### Well its a rate increase of 4.6 % of income.(1+ / 0-)
Recommended by:
ozsea1

Not a 4.6% increase in taxes, the increase in the top rate is actually 13.1% (4.6/35) increase in taxes.

So from a framing perspective need to say that its a return to the Clinton-era rates, moving from 35% -> only 39.6%. People may think that's a 4.6% increase in the taxes, but it isn't. Its more than that, and that needs to be done.

• ##### doesn't the measly(2+ / 0-)
Recommended by:
War on Error, ozsea1
the majority of the grid lock in Congress stems from this measely 4.6% increase on income over \$250,000.  Period.
argument cut both ways. If it is so measly, then in the context of the federal budget won't it generate a measly amout of revenue?
• ##### Absolutely true. Not much money.(2+ / 0-)
Recommended by:
misslegalbeagle, freedomalliance

The estimates are \$700 billion over 10 years, or \$70 billion a year.

\$70 billion a year is very little when the annual deficit is running over \$1 trillion a year.

• ##### By and of itself, yes(1+ / 0-)
Recommended by:
War on Error

On this point, I agree with coffeetalk.

A much more comprehensive individual and corporate tax reform is needed, along with scaling our global empire to better suit our national interests ( scale back, that is ) and redirecting energy-related subsidies to alt-energy and away from fossil fuels.

This won't happen overnight, and even if it did, the "problem" wouldn't magincally disappear overnight either.

But do it, we must.

"No man is rich enough to buy back his past." ~ Oscar Wilde

[ Parent ]

• ##### I anticipated this question.(1+ / 0-)
Recommended by:
misslegalbeagle

Regardless of the impact, it is an increase in revenue provided by those who can most afford it.

I thought the Dems made a mistake when they chose the \$250,000 baseline.  I would have like to see the base at \$1,000,000 because I know two kids with huge student loans, lawyers in DC, who together earn \$300,000.  They are not fat catting it, sadly.

I didn't include the argument for another tweek I would like the Dems to propose:

A progressive tax on Capital Gains.

Most of the uber wealthy make their gains via investments, not income.

To verify this point, check out how well Congress members have done during this Recession.  Most have made huge capital gains.

Net Worth, 2010

And check out how well Paul Ryan and other GOP Congress members have done:

PROOF: Paul Ryan IS Better Off Than He Was 4 Years Ago! Most Congress Members Are

Even PAUL RYAN, Yes, he's better off today, has increased his meager fortune since the crash of 2008.

2008 Net Worth:     From \$790,093 to \$2,830,000
2010 Net Worth:     From \$927,100 to \$3,207,000

And John Boehner?  Yes, he's better off today!

2008 Net Worth:     From \$1,700,021 to \$6,626,000
2010 Net Worth:     From \$2,099,107 to \$6,085,000

Mitch McConnell? Yes, he's better off today!
2008 Net Worth:     From \$2,002,038 to \$31,955,998
2010 Net Worth:     From \$9,839,049 to \$44,587,000

Eric Cantor?  Yes, he's better off today!

2008 Net Worth:     From \$1,853,155 to \$6,707,999
2010 Net Worth:     From \$2,893,110 to \$8,048,999

WHAT THE HECK ARE THESE REPUBLICANS SHOUTING ABOUT WITH THEIR "Are you better off than you were 4 years ago" MEME?

Again, most GOP and DEM Congress members are better off TODAY!

Maybe this is why Congress doesn't discuss a Progressive Tax on Capital Gains?

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### Some more sacred cows there(3+ / 0-)
Recommended by:
War on Error, Pete Cortez, a2nite

Maybe adjust the short term rate, and leave the long term rate unchanged, to encourage long term investment vs short term "speculation".

Another idea is to add a temporary transaction tax to various securities ( commodity futures, for example ) trading, the goal being to reduce the volatility that results from "speculation".....

The Investor/Comfortable Classes are and will continue to fight any changes, regulations and reforms tooth, claw and nail.

They can afford to buy whatever whatever legislation suits their bottom lines....

There are a lot of good resources online to research this rather taxing subject. Being better informed is the first step towards reform.

"No man is rich enough to buy back his past." ~ Oscar Wilde

[ Parent ]

• ##### That's a pittance. (2+ / 0-)
Recommended by:
ozsea1, nextstep

The Buffett Rule, which proposes an effective tax rate of 30% on incomes (all income, including capital gains income) beginning at \$1 million and up raises about \$4 billion a year, according to the White House.

That's a rounding error in our annual budget.

• ##### Agreed(1+ / 0-)
Recommended by:
coffeetalk

I think that more comprehensive tax reform will pass ONLY when the electorate is better educated and informed on the subject.

As I stated above, dreamin'....

"No man is rich enough to buy back his past." ~ Oscar Wilde

[ Parent ]

• ##### The problem is that there just isn't that much(3+ / 0-)
Recommended by:
ozsea1, freedomalliance, nextstep

money in raising taxes on the rich, even if you define the rich to include two-income families making \$250,000 a year.

We need comprehensive tax reform to make the system fairer. All this about "the rich not paying their fair share" doesn't help. Some of the rich ARE paying what I would consider their "fair share" (effective rates of 26% - 28% on many working professional couples) Some are not.  Just raising the top two marginal rates does not do much to make things "fairer," and doesn't raise all that much money.  Far better to do comprehensive reform, structured in a way that increases revenues.

More importantly, we also need to educate people that you can't fix the long-term deficit/debt problem JUST by "taxing the rich."   There isn't enough money there.  You ALSO have to significantly cut spending, or you have to ALSO raise taxes on everyone, as the People's Budget does.

There are no easy answers.  And people who perpetuate the "just tax the rich" myth are hurting, rather than helping.

Recommended by:
coffeetalk

on the diary, you hit out of the park,

I truly do find the let's go back to the 70 percent tax rates to be bizarre and insane. Especially since  as the data shows, those tax rates were not effective because of the deductions and credits that the tax code was riddled with , when they try to argue, I use the same link to the tax policy center and ask them to look at the top 1 percent and income taxes as a percent of income.

And I am usually ganged up when I suggest something that almost every economist agrees with, that higher marginal tax rates think over 50 percent, distort incentives, reduce growth, and increase tax invasion.

• ##### deja vu(1+ / 0-)
Recommended by:
War on Error

http://www.dailykos.com/...

calling in reinforcements :)

• ##### True(0+ / 0-)

Always fun.

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### what were rates under Eisenhower?(1+ / 0-)
Recommended by:
War on Error

when the US was doing ok economically and there were no riots in the streets (ignoring race issues here)?

surely much higher.

Doesn't that tell us something?

• ##### Sigh. One more time.(1+ / 0-)
Recommended by:
freedomalliance

No it doesn't.  Because (1) it started on incomes so high as to be millions in today's dollars; and (2) more importantly, there were so many deductions and loopholes (pre Tax Reform Act of 1986) that only an idiot without the money to hire a tax accountant paid those rates on much of his/her income.

See my comments above, and the link to EFFECTIVE tax rates, which are far more related to what people actually pay in federal income taxes.

This was discussed extensively in the comments above.

• ##### patronising, or what?????? (nt)(1+ / 0-)
Recommended by:
War on Error
• ##### No not true, coffeetalk(0+ / 0-)

See below

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### You are just wrong.(1+ / 0-)
Recommended by:
freedomalliance

See my comment below.  You are looking at MARGINAL rates.  Those DO NOT reflect what people pay in federal individual income taxes.

• ##### Here's a link to an interactive tax rate history.(0+ / 0-)

http://taxfoundation.org:81/...

And let's look at the year 1929, the end of the 1925 - 1931 RECORD low high wage earner tax rate of 25%:  The HUGE Tax Holiday preceding the Great Depression:

1929 Tax Rates

1.5% \$0 \$4,000
3.0% \$4,000 \$8,000
5.0% \$8,000 \$10,000
6.0% \$10,000 \$14,000
7.0% \$14,000 \$16,000
8.0% \$16,000 \$18,000
9.0% \$18,000 \$20,000
10.0% \$20,000 \$22,000
11.0% \$22,000 \$24,000
12.0% \$24,000 \$28,000
13.0% \$28,000 \$32,000
14.0% \$32,000 \$36,000
15.0% \$36,000 \$40,000
16.0% \$40,000 \$44,000
17.0% \$44,000 \$48,000
18.0% \$48,000 \$52,000
19.0% \$52,000 \$56,000
20.0% \$56,000 \$60,000
21.0% \$60,000 \$64,000
22.0% \$64,000 \$70,000
23.0% \$70,000 \$80,000
24.0% \$80,000 \$100,000
25.0% \$100,000

Yes, from 1925 - 1931 high earners paid THE RECORD LOW TAX HOLIDAY RATES in history, however, most American wage earners were not charged punitive rates like they are today.  THE GREAT DEPRESSION FOLLOWED!

Let's look at 1935 for an example.  All wage earners used the same progressive tax table.  Certainly there were fewer moms working, but there were still millions of single people/women working.  Notice that most wage earners did not pay more than 4% in Federal taxes, and that was a considerably higher rate than the prior 1920s decade:

1935 Tax Rates:

4.0% \$0 \$4,000*
8.0% \$4,000 \$6,000
9.0% \$6,000 \$8,000
10.0% \$8,000 \$10,000
11.0% \$10,000 \$12,000
12.0% \$12,000 \$14,000
13.0% \$14,000 \$16,000
15.0% \$16,000 \$18,000
17.0% \$18,000 \$20,000
19.0% \$20,000 \$22,000
21.0% \$22,000 \$26,000
23.0% \$26,000 \$32,000
25.0% \$32,000 \$38,000
28.0% \$38,000 \$44,000
31.0% \$44,000 \$50,000
34.0% \$50,000 \$56,000
37.0% \$56,000 \$62,000
40.0% \$62,000 \$68,000
43.0% \$68,000 \$74,000
46.0% \$74,000 \$80,000
49.0% \$80,000 \$90,000
54.0% \$90,000 \$100,000
56.0% \$100,000 \$150,000
57.0% \$150,000 \$200,000
58.0% \$200,000 \$300,000
59.0% \$300,000 \$400,000
60.0% \$400,000 \$500,000
61.0% \$500,000 \$750,000
62.0% \$750,000 \$1,000,000
63.0% \$1,000,000

This increased under IKE and stayed the same until REAGAN.

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### Such a misunderstanding of tax policy. (1+ / 0-)
Recommended by:
freedomalliance

Again, you are looking at MARGINAL RATES.  They do not tell you what people were paying.  (

First, you have to convert all of those to today's dollars.   \$1 million in 1935 is many, many, many times that in today's dollars.   Today, the top 1% is around \$340,000 if I remember correctly.  In 1935, I'd be willing to bet  the top 1% started in five figures.  The average household income in 1935 was around \$1000 a year.  So those rates didn't even START until a household was making four times the average.  Today, average household income is like \$50,000.  If you extrapolate 1935 to today, that 10% rate on incomes of 10 times the average would be on today's incomes of \$200,000.

As for this statement:

This increased under IKE and stayed the same until REAGAN.
YOU CAN'T JUST LOOK AT MARGINAL RATES.  Here is the proof from the CBO.  Look at the SECOND CHART here.

Those are CBO numbers.  In 1979, when top marginal rates were 70%, the top 1% paid an EFFECTIVE rate of 21.8%.  In 2000, under Clinton's top marginal rate of 39.6%, the top 1% paid MORE THAN UNDER THOSE 70% RATES -- they paid  24.2% in effective individual income tax rates.

The rich paid MORE UNDER CLINTON THAN THEY DID WHEN THE TOP MARGINAL RATE WAS 70% BEFORE REAGAN.  Those are CBO numbers.

The difference is that the definition of AGI changed dramatically with the Tax Reform Act of 1986.

That is clear, clear, evidence that those 1935 top marginal rates you quoted do NOT mean anything in and of themselves.  You have to look at (1) where they start in TODAY'S dollars, and (2) more importantly, what deductions, exemptions, loopholes.  The TRA of 1986 changed things drastically -- far, far fewer "below the line" deductions, meaning far higher actual dollars paid in taxes even when the marginal rates are lower.

Please stop looking at pre-1986 top marginal rates and try to translate them into post-1986 rates.

The only thing that matters is how many dollars a person making \$500,000 pays in federal income taxes.  He can have a top marginal rate of 90% and have that affect only 10% of his income, and he will pay less than if he has a 35% rate that affects 90% of his income.  That's basic math.

Marginal rates, in and of themselves, are MEANINGLESS.  What matters is how many dollars a household pays in federal income taxes.  EFFECTIVE tax rates -- while far from perfect -- are far better at getting to that.

• ##### Yes, coffeetalk. Let's make sure to keep all(0+ / 0-)

in the dark.

I'm suggesting that looking at the former progressive tax rates and comparing them to today's tax rates is a telling picture.

Is it complete?  No.

Whose side are you one, anyway?

We are addressing the simplified picture to the voters, not economists.

Remember the kos rule?  If you disagree, write your own diary.  I challenge you to do so and make it understandable by 80% of the voter base.  I'd sure appreciate it.

Thank you

It's difficult to be happy knowing so many suffer. We must unite.

[ Parent ]

• ##### I support a progressive tax system(1+ / 0-)
Recommended by:
freedomalliance

but writing diaries about tax policy that are just wrong is not acceptable.

Your statement in the diary that, while some are talking about Clinton rates on top incomes, your "dream" is to return to pre-Reagan rates, as the top 1% paid MORE under Carter than they did under Clinton, is just wrong.  Just factually, indisputably, demonstrably wrong, as those CBO numbers demonstrate.

Perpetuating a fallacy that 70% under Carter -- pre-Tax Reform Act of 1986 -- would be essentially the same tax burden if we had a top marginal rate of 70% today does not help the debate.  That is because it deceives people as to what is realistic and "do-able" today.  No sane economist would support a 70% top marginal rate on TODAY'S definition of AGI for anything even close to two-income households of \$250,000 and up.  It's false to suggest that "because we were fine under those 70% rates before, we'd be fine now," and it gives people false information.  Instead, as those CBO numbers demonstrate, those Clinton rates are pretty much the highest on that \$250,000 to \$1 million group ever.  You are not going to get any sane politician to support anything more than that on that group. No elected federally official I know -- none -- is suggesting anything higher than that, because they understand tax policy.

Proof of what I'm saying is in the Buffett Rule, which talks in terms of a 30% EFFECTIVE tax rate on incomes above \$ 1 million.  People who understand tax policy look at effective rates, not top marginal rates in isolation.  Look at the White House -- it talks about  EFFECTIVE tax rates.

It is really important to understand the difference between marginal rates and effective rates if you want to discuss tax policy.

• ##### Even your chart in your diary is patently wrong(1+ / 0-)
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freedomalliance

It shows a list of top marginal rates and then, for 2011, and EFFECTIVE tax rate, as if one related to the other.  You are giving the absolute wrong impression with that chart.  Instead, you should show all EFFECTIVE tax rates on the top 1% -- which would show that today's EFFECTIVE rates are low compared to the high reached during the Clinton years, NOT during the pre-Reagan years, as your chart (which lists only marginal rates) implies.