Here are a few empirically verifiable observations that should contribute to our understanding:
1. There is a huge, largely unpublicized, correlation between family income and hours worked annually.
Sounds simple, and it is. The poor simply work less, for a variety of reasons.
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while the correlation may apply to the middle classes, it obviously does not apply at the extremes; uneducated laborers and the wealthy born/well connected.
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2. The income tax rate structure is already extremely “progressive” if measured by the % paid by each quintile. The lowest two quintiles pay less than 5% of the revenues, the top quintile pays over half.
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by “extremely progressive”, i assume you’re refering to the progression affecting the bottom 75%.
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3. Historically, increases in marginal tax rates NEVER bring in the predicted tax revenues. People can simply work less or arrange their affairs to legally (or illegally) pay less. Indeed, regarding the capital gains tax rate, there is a perfect record going back decades of lower rates bringing in more tax revenue, and higher rates less revenue.[/quote]
does “predicted tax revenues” mean less revenues than before a rate hike?
do higher tax revenues under lower cap gains rate = higher total revenues? or higher than “predicted”? and does individual behaviour such as tax reduction strategy have much to do with it? ie., not cashing out holdings during times of higher rates?
i think these observations are inconclusive regarding fairness or unfairness of our tax system.
