Find a registered adult who doesn't work for Congress or a think tank that covers the economy. Ask him or her two questions: 1) What do you think the highest income tax rate for individuals should be? After they tell you, ask, 2) What do you think the top rate is right now?
My experience in conducting this experiment is that hardly anyone thinks the top rate should be over 25 percent (most say 20 percent), and hardly anyone knows that the top rate now has reached 35 percent (most think the top rate is about 20 percent). It is sobering for them to ponder the disparity.
A young man I met today--a chatty fellow who said he thought taxes should go up--was surprised about both figures, But about the 35 precent figure he asserted boldly, "I can live with that!" (He can all right, I happen to know that he's barely employed at all.)
So, I asked whether he knew that as of January 1, the top rate is slated to go up to 39.5 percent. No, he didn't. "That's getting up there," he admitted.
I asked whether he knew that the Health Care Act (Obamacare) will put another four percent onto "high earners" (as part of the payroll tax) to cover the Act's increase in costs? He didn't.
Did he realize that state and local income taxes add further to the total income tax paid and make it likely that by next year it will be common for top earners in many localities to pay over 50 percent of their income in income taxes-- beyond what they pay in sales taxes, payroll tax (Social Security and Medicare) and property taxes? Gosh, it had never dawned on him.
I asked if he knew that the Alternative Minimum Tax was slated to go up--cutting further into the middle class. He didn't.
I asked if he knew that the Death Tax (Estate Tax) that has dropped to zero this year, is slated next January to go up to 45 percent. He certainly did not. Did he know that the Administration wants to raise the capital gains tax from 15 to 20 percent? He not only didn't know, he didn't know what a capital gains tax is.
Now, all these taxes, except the Death Tax and the capital gains tax, go after annual income (commonly, salaries), not wealth. There are plenty of truly rich people who don't mind an increase in income tax, because an income tax doesn't begin to touch their money--which is in trusts, gold, property, what have you. A rich person can preen as he displays his own willingness to pay more income tax. Big deal.
You don't really soak the rich with an income tax hike. You soak the people trying to become rich. Many are high earners only sporadically--a person who makes a major sales commission, for example or someone who sells an invention. They can be quite modest earners in other years.
So, if you have it in for all those greedy small businessmen and entrepreneurs--that is, the people trying to create the economy and jobs of the future--by all means sock 'em with increased income taxes!
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