What If?

From Counterpunch, via the nc links:

If corporations and households amassing $1 million or more in income each year were now paying taxes at the same annual rates as they did in 1961, the IPS researchers found, the federal treasury would be collecting an additional $716 billion a year.

In other words, if the federal government started taxing the wealthy and their corporations at the same rates in effect a half-century ago, the federal debt to investors would almost totally disappear over the next decade.

Similarly stunning numbers have just come, earlier this month, from MIT economist Peter Diamond and the University of California's Emmanuel Saez, the world's top authority on the incomes of the ultra-rich. These two scholars have calculated some fascinating "what ifs" that dramatize just how spectacularly the incomes of our wealthiest have soared over recent decades.

In 2007, Diamond and Saez point out, taxpayers in the nation's top 1 percent actually paid, on average, 22.4 percent of their incomes in federal taxes. If that actual tax burden were to about double to 43.5 percent, the top 1 percenter share of our national after-tax income would still be twice as high as the top 1 percent's after-tax income share in 1970.

But that wouldn't be fair.  How could such people pay those taxes and still afford a Manhattan apartment, a house in the Hamptons, a ski villa in Vail and a house in Palm Beach?  And how would they be able to trickle their wealth to the rest of us?  I think there is a way to make our budget deficits manageable without slashing benefits for the very poor, it's just that the people who might have to pay more have more power than the rest of us.  I think people should be able to make lots of money, I just think we should try to put some type of upper limit on it.  A 90% top marginal rate seemed to work like a charm back in the 50s, maybe we ought to try out a 60% top rate over, say $5 or $10 million.  I think it is counterproductive to limit charitable deductions in order to lower the top marginal rate under 30%, but that's just me.  It seems like lower marginal rates is the direction our "tax reform" will be headed.  I just don't think that will help ameliorate the growing income inequality.