David Leonhardt wants to increase taxes on the very highest incomes (h/t Felix Salmon):
Today's tax code makes no distinction between income above $373,000 and income above, say, $5 million. Both are taxed at 35 percent.
That is a legacy of the tax changes of the early 1990s, when far less of the nation's income went to millionaires. Today, you can make a good argument for a new, higher tax bracket on the very largest incomes. In the past, the economist Thomas Piketty says, higher marginal tax rates tended to hold down salaries and bonuses, because executives had less incentive to angle for multimillion-dollar pay.
Do these ideas stem in part from anger and bitterness? Of course they do. How can you not be a little angry and bitter about the role that huge, unjustified pay played in causing the worst recession in a generation?In fact, that's sort of the point. Given the damage that's been caused by our decidedly unmeritocratic system of paying executives, the most irrational course of all would be the status quo.
I'm not angry and bitter; I'm about as mad as I am at the prospect of people who bought homes they can't really afford getting a bailout while I continue renting--which is to say, not very. Life is rather too short to spend it getting angry at remote strangers.
I also note, just as an aside, that the definition of "very rich" seems increasingly to be set at "just above the level a top-notch journalist in a two-earner couple could be expected to pull down".
That said, I don't see why brackets top out at a relatively low level of income. Indeed, I don't see why we have tax brackets. They're inefficient, and a lot of them have pernicious marginal effects on those near the ceiling. Why not a continuously scaling function from negative (EITC) to some maximum? These days, people use either printed tax tables or tax software to prepare their taxes; this shouldn't present an undue hardship. Obviously, with my preference for less government, I would recenter the scale so that people making $250,000 a year pay relatively less, and those making $10 million pay relatively more, in order to make the proposal revenue neutral. But the basic concept seems bipartisan.
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