If we are to have graduated rates then the TOP marginal rate should be levied only on very high incomes indeed....
Why? Esp. if in the same post you propose a single rate.
If there is not to be a single rate, isn't say two rates, one for income from the threshold for paying income tax up to maybe $250K and the other from $250K up, a lot closer to having the single rate than having a higher rate for the very rich?
I could argue for a flat tax, or for a highly progressive tax (my actual opinion is more towards the former), but I can think of any arguments for the idea that once you have multiple tax rates you should only hit the really rich with the highest rate.
Re: "There is a good reason to have taxes on investment income low (not necessarily lower than ordinary income...."
I agree that tax rates on 'investment income' should NOT be any lower then rates on 'regular' income.
That isn't what I said, your expressing a different idea, not agreement with mine. Not necessarily lower, meaning they don't have to be lower (as long as they are low), not that they shouldn't be lower. If investment capital rates can only be low, if they are to be lower than ordinary income rates than I think they should be lower than ordinary income rates. They should always be low, under any circumstances. Having them be other than low is not consistent with the goal of supporting long term growth. This is true both because investment is the main driver of long term growth, and because investment is more sensitive to higher tax rates, it is more easily discouraged, distorted, or chased off, than labor.
I'd want the low taxes on investment to go along with low taxes on ordinary income, but for the long run its vital to have taxes on investment stay low, even if the politics don't enable a low overall tax structure. Its not a moral point but a practical one. High taxes on investments have very bad consequences, more so then high ordinary income tax rates on wealthy individuals. (And I don't think anyone on this thread, or prominent in American politics, is proposing high income tax rates on the poor or very high rates on the middle class)
I base that position on the firm belief that the government should *not be in the business* of picking 'winning' and the 'losing' careers...
Picking winners and losers is a far more specific operation than having different rates on ordinary income and on investment income. The later isn't picking winners and losers. |
