How do you get the rich to pay their "fair share"? The president and his party have an answer for you, assuming that you regard the question as legitimate:
Just raise their marginal tax rates. Instead of telling them to send 35 of the next 100 dollars they make to Uncle Sam, tell them to send, say, 40 or so. They can afford it, and middle-income voters don't have to pay a cent.
Barack Obama has the rules of propaganda on his side here: The simple beats the complex, and social-justice symbolism packs an emotional punch that economics can't match. But the reality is clear: You can jack up rates on the rich all you want, but that doesn't mean you'll get more tax revenue out of them.
History shows this. Top income-tax rates have been very high — up to 94% during World War II — and very low — down to 28% after Ronald Reagan's tax reform of 1986. It's striking how little their movements affect personal income tax revenues.
That revenue has varied, mostly in a range between 6% and 10% of GDP, but its postwar ups and downs show no relation to changes in the top rate.
Revenue sank to a low of 5.7% in 1949 with the top rate at 91%; it reached as high as 10.2% in 2000 with the top rate at 39.6%. Seven years before that, in 1993, it only reached 7.7% with the same top rate. Going back a few more years to 1989, it was 8.3% of GDP at a top rate of only 28%.
The lesson is that income-tax revenues are driven by swings in the economy and stock market. Rates are a political sideshow.
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