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Politics : Actual left/right wing discussion
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From: TimF12/8/2006 12:54:53 PM
   of 10087
 
Bush Tax Hikes?
Not likely.

...The most popular option being discussed in Democratic policy circles is a hike in the highest marginal tax rates to reduce the burden of the alternative minimum tax and/or redistribute income away from the so-called rich to the middle-class and poor. Additionally, most Democrats have traditionally supported raising the payroll-tax wage cap ($94,200) to address the entitlement budget crisis, instead of creating personal retirement accounts and slowing expenditure growth through price-indexing Social Security benefit payments. In the end, congressional Democrats may not need to propose new taxes since massive tax hikes are already baked in the cake: The Bush tax cuts are slated to expire on January 1, 2011.

From an economic standpoint, raising the top tax rate and the payroll-tax wage cap would hurt the economy and ultimately raise far less tax revenue than static-revenue estimating models would predict. The combination of these two proposals would place dramatically higher tax rates on economic success. As shown in the chart below, assuming that these tax hikes became effective in 2008, the maximum federal tax rate would rise from the current 38.44 percent (35 percent income tax rate plus the Medicare payroll tax) to 52.89 percent. Such an increase would severely reduce after-tax incentives for productive efforts while encouraging tax avoidance....

article.nationalreview.com

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The graphs at that link show the change in the top marginal rate (including uncapped payroll taxes) if the changes some Democrats are pushing actually go through.



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