I think there are four takeaways from Jordan Weissman’s Salon article on effective and nominal tax rates. They are:
- The nostalgia that progressives seem to have for high marginal tax rates on the highest income earners is misplaced.
- Effective rates of taxation in the U. S. have been quite persistent for a remarkably long time.
- Effective tax rates weren’t a lot different 53 years ago than they are now and that’s true at all income levels.
- Individuals with higher incomes pay slightly lower average tax rates while middle income and lower income earners pay higher average tax rates than was the case 50 years ago
- Despite all of this progressives continued to be “obsessed” (Mr. Weissman’s characterization) by high marginal tax rates.
The most charitable explanation for that obsession, advanced by Mr. Weissman, is the not particularly well-founded belief that high marginal tax rates produce greater income equality. A somewhat less charitable explanation is that high marginal tax rates provide greater opportunities for extracting favors, rents, political donations, and other quids pro quo than low rates do.
My preference would be for middle and lower income people to have more disposable income rather than making rich people poorer and methods for doing that are straightforward. Naturally, that’s already been rejected on a bipartisan basis.