For a long time in this blog I have been advocating tax increases for upper income levels, even though these tax increases will impact me personally. Of course I would like to say that my willingness to pay higher taxes is solely a result of my generous nature and desire for societal balance. But truth be told, while I do want to live in a country with a great infrastructure, a strong middle class, and a fair tax system that does not favor the wealthy, I also recognize the serious consequences if we continue to have such a deep economic imbalance in this country. The potential impact if we don’t address the tax code could be far worse for upper income Americans than a 3 or 4% tax increase. And perhaps we are beginning to see the beginning of what might be if we don’t strive for fairness.
Conservatives have fought to the death any hint of tax increases for the rich. In fact, they have made this the one key theme of the Republican party, with politicians signing a “no tax” pledge that would be the kiss of death if violated. And even though it was probably contrary to their own interests, many lower income Americans seemed to agree. At least in the beginning.
But now, between the “99%” uprising, and probably more importantly the real life example of how the tax code favors the uber-rich that Mitt Romney is providing on a daily basis, we could potentially face major backlash that could really effect the rich. Keep in mind the historical top tax rates from differerent points in time –
- 1944 – 94%
- 1963 – 91%
- 1981 – 69.13%
- 1986 – 50%
- 2000 – 39.6%
So just imagine if the average American radically changes their opinion, and decides that it is time to really sock it to the upper income levels. Instead of a return to the 39% range we go a litle further back in time, to top tax rates of 50% and above! This does not seem implausable to me, since during my tax paying lifetime the top tax rate has been literally double what it is right now.
That is why I favor a little compromise right now. A 39% top rate seems fair and equitable – especially if a possible alternative is a 50, 60, or even 70% top rate.