A reader writes:
I'm a bit late with this, but I wanted to respond to your post yesterday in which you wrote:
"To many on the right, this inequality is a non-issue, and in an abstract sense, I agree. Penalizing people for their success does not help the less successful."
Let's look at this issue another way: A homeowner who owns a $1 million home will pay more for insurance than will the owner of a $200,000 home. The insurer is not penalizing the first homeowner for his success. The first homeowner simply has more to lose and therefore pays more. If you believe the core function of government is to provide a stable environment (physical, financial, legal, social) in which society can flourish, the wealthy have more to lose from government's absence. Penalizing the successful wouldn't help anyone. Underwriting the successful costs money.
Underwriting risk-free millionaire bankers costs a lot of money. I take the point, as did Adam Smith. I have come around to the need for more revenue and as a practical matter, that will disproportionately affect the well-to-do. This piece also has a valid point:
Measured against the size of the economy, U.S. federal tax revenue is at its lowest level since 1950. Tax receipts in the 2011 fiscal year are expected to equal 14.4 percent of GDP, according to the White House. That compares with the 40-year average of 18 percent, according to the Congressional Budget Office. So if tax receipts return to their long-term average amid an economic recovery, about one-third of the annual budget deficit would disappear.
Likewise, individual federal income tax rates have declined sharply since the top marginal rate peaked at 94 percent in 1945. The marginal rate -- which applies to income above a numerical threshold that has changed over time -- was 91 percent as late as 1963 and 50 percent in 1986. For 2011, the top marginal rate is 35 percent on income over $373,650 for individuals and couples filing jointly.
My italics. Imagine if Obama made a speech in which he called for a return to the tax rates under Reagan! Imagine the confusion on the brain-dead FNC right!