Top marginal tax rate in US now ~65%

[MichaeltheGreat]

True, but it's something the left in the US really doesn't grasp. The other thing is that too many left-leaning folks in the US aren't really policy wonks, or technical experts. All that stuff is icky and corporate and let's go commune with the universe or whatever the **** has replaced the "free love" component of leftist psyche in the US. So they get hosed on policy issues time and again. Case in point, all this fetish (and the false wailing and gnashing of teeth from the right) about the Bush-era Federal Income Tax rates, when the real issues in the tax code are things like capital gains rates, re-use of accellerated depreciation on existing assets, special purpose breaks and credits.

The best revenue approach on taxes is to slightly lower all personal rates, significantly lower the bottom 3 rates on corporate taxes with a phase out/recapture, and split capital gains rates so that venture/risk capital to fund real startups and expansions (as opposed to creating proxy entities to shelter income) are tax exempt, while ordinary capital gains from resale of assets are taxed at something closer to, but still less than, the applicable tax rate on ordinary income. Then go after the sorts of special purpose deductions and subsidies that are the bulk of the internal revenue code.

[Kidlicious]

The theory is that deficit reduction causes revenue to decline, not only raising tax rates. But revenue will not decline if the economy grows.

[MikeH]

That is only true above a certain level though.

[MichaeltheGreat]

Like Ben Kenobi he's probably living in a fantasy land where raising tax rates doesn't raise revenue.

Raising tax rates minimally raises revenue. There's a point tax rates become increasingly counterproductive and ultimately cause revenue to decline.

[MichaeltheGreat]

Broaden the base, lower the rates. And get rid of all capital gains taxes.

A majority of capital gains are essentially non-job creating transactions between asset owners. The only jobs created are for the brokers, the caddies for the CPA firm partners, and the guy in India who does the actual accounting work for the CPA firm. Capital gains are also used in conjunction with repeated use of accelerated depreciation to manipulate ordinary income into deferred capital gains.

Case in point, I'm working on a transaction involving a couple of existing powerplants with a lot of time remaining on their power purchase agreements. After purchase, they'll have minimal capital improvements to convert them to combined heat & power, which will change the core plant from 20 year depreciation to 5 year. On the whole plant, not just the capital improvements, all with a new placed in service date as of the re-start. Tax depreciation will offset all operating income, with a little pass through on top, then the buyer will flip the assets and take a capital gains hit at the end, after paying nothing in income taxes for five years. The next buyer will do the same. Then the next. The first set of buyers will create about zero net jobs (most of operating crews will be laid off during capital improvement program, so this will offset creation of construction jobs.) Subsequent buyers will create zero jobs as well, as the same crews will operate. At the end of the process, 15 years of profitable operating income will be taxed at lower capital gains rates after one to five year deferrals when the asset is resold. Who exactly benefits from this sort of tax subsidy game?

[Kidlicious]

When in the history of the American Republic has an increase in taxes been used for anything other than more spending?

Be fair. For a good part of that history, many of us were slaves and we had our masters to provide all of our needs for us.

[DinoDoc]

Because it raises revenue, you know the half of the deficit reducing equation you lot like to pretend doesn't exist.

When in the history of the American Republic has an increase in taxes been used for anything other than more spending?

[giblets]

Because it raises revenue, you know the half of the deficit reducing equation you lot like to pretend doesn't exist.

Like Ben Kenobi he's probably living in a fantasy land where raising tax rates doesn't raise revenue.

[Kidlicious]

It wasn't really meant to balance the budget. It was meant to avoid the fiscal cliff, and a recession.

[Imran Siddiqui]

The deal also put in place a tax cut for those making under $400,000. So of course that isn't going to be good for the deficit.

[MikeH]

The numbers seem nice and low for you.

I pay 40% on earnings above £32k and 50% on anything I would earn above £150k (though that's dropping to 45% in april).
+ 12-14% national insurance
+ 20% sales tax on most things.
+ vast additional duties on fuel, booze etc.

[Kidlicious]

I think it's some supply side thinking.

[Robert]

For a married couple living in NYC earning about 360k a year agi

The whole range from 300k to 400k is above 60%

Based on 33-35% federal marginal rates, 10% state+local, 3.8% medicare tax, and phaseouts for personal exemptions and itemized deductions. Could be even higher if they have a mortgage.

35% + 10% + 3.8% = >65%?
please elaborate for clueless european.

[kentonio]

The deal is devoid of any substantive spending cuts and indeed includes additional spending. Why should it get any deficit-reduction credit at all?

Because it raises revenue, you know the half of the deficit reducing equation you lot like to pretend doesn't exist.

[Guynemer]

USians don't like taxes, period. You will never please them with any tax code.

Our country was founded by tax-dodging rich men. What else would you expect?