Well, that is simply a "philological" fallacy. It depends what you call taxes. At 75,000 you max out payroll taxes at 15%, after $75,000 or so, you pay only the "Medicare" tax of 1.5% or so on "earned income". But if you are Bill Gate, not only is your tax on earned income only 42% (39.6% income tax and 1.5% medicare) but the majority of your income is long term capital gain, so the overall tax rate is maybe in the 22% range or so, less than the marginal rate of the $75,000 guy by almost 50%. Actually, because of a tax change introduced by Clinton to encourage investments in start ups, a lot of his income from his new investments in the last 10 years in start ups is taxed only at 10% (the super capital gain rate, and in fairness, the poor guy cannot take more than $10 MM per year in super capital gains (G), thus i stay with his marginal tax of 22%). Until you manage to bring the marginal tax rate of the $100,000 or less earner to the same 22% or less (meaning IRS marginal rates at 7%), there is no economic need nor any "social justice need" to decrease the rates of the top bracket. It should not be increased either ( and I do not think that Gore suggest increasing taxes at higher brackets).
Economically, however, the tax cut proposed by Bush will get us back into deficit spending, this will increase interest rates and subsequently plunge the economy into cycles of recessions every three years or so. Furthermore, increases in deficit will once more raise the specter of actual default of the US government which can be countered later only by massive tax increases. More and more of the annual budget will be needed to pay interest. reducing the current debt of more than $5 trillions to around $1 to $2 trillions over a period of 10 years, will assure a long period of low interest rates and continue the current prosperity. As we say in "engineering circles": "if it ain't broke, don't fix it".
Personally, i will do much better if Bush wins, at least short term, but long term, we will all suffer.
Zeev |
