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Get Ready for a 70% Marginal Tax Rate

Posted By admin On July 18, 2011 @ 7:29 am In Tile,U.S. News | Comments Disabled

MICHAEL J. BOSKIN
Wall St Journal [1]
July 18, 2011

Some argue the U.S. economy can bear higher pre-Reagan tax rates. But those rates applied to a much smaller fraction of taxpayers than what we’re headed for without spending cuts.

President Obama has been using the debt-ceiling debate and bipartisan calls for deficit reduction to demand higher taxes. With unemployment stuck at 9.2% and a vigorous economic “recovery” appearing more and more elusive, his timing couldn’t be worse.

Two problems arise when marginal tax rates are raised. First, as college students learn in Econ 101, higher marginal rates cause real economic harm. The combined marginal rate from all taxes is a vital metric, since it heavily influences incentives in the economy—workers and employers, savers and investors base decisions on after-tax returns. Thus tax rates need to be kept as low as possible, on the broadest possible base, consistent with financing necessary government spending.

Second, as tax rates rise, the tax base shrinks and ultimately, as Art Laffer has long argued, tax rates can become so prohibitive that raising them further reduces revenue—not to mention damaging the economy. That is where U.S. tax rates are headed if we do not control spending soon.

Full article here [1]

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URLs in this post:

[1] Wall St Journal: http://online.wsj.com/article/SB10001424052702304911104576443893352153776.html?mod=WSJ_Opinion_LEADTop

[2] Image: http://www.prisonplanet.tv/

[3] Stock up with Fresh Food that lasts with eFoodsDirect (AD): http://www.efoodsdirect.com/

[4] High-income Californians may pay nation’s highest tax rate: http://www.prisonplanet.com/high-income-californians-may-pay-nations-highest-tax-rate.html

[5] Why the FED’s Zero Interest Rate Policy Hurts the Economy: http://www.prisonplanet.com/why-the-feds-zero-interest-rate-policy-hurts-the-economy.html

[6] A 62% Top Tax Rate?: http://www.prisonplanet.com/a-62-top-tax-rate.html

[7] The Real-World Middle Class Tax Rate: 75%: http://www.prisonplanet.com/the-real-world-middle-class-tax-rate-75.html

[8] Get Ready To Taste The Bitter Side Of Keynesian Economics: http://www.prisonplanet.com/get-ready-to-taste-the-bitter-side-of-keynesian-economics.html

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