High income and Wealth
By Arnold Kling
Some recent articles on income and wealth.
high tax rates hit people who are currently earning high incomes — usually late in life, after having worked their way up in their professions over a period of decades. Genuinely rich people who have never had to work a day in their lives — people like Congressman Kennedy — are unaffected by income taxes, except on what they are currently earning, which may be a tiny fraction of what they own.
In looking over the IRS report on the 400 highest-income taxpayers, Bruce Bartlett writes,
although the average tax rate on the top 400 fell, one has to go to the original IRS report to discover that their share of total income taxes paid rose by 50 percent, from 1.04 percent in 1992 to 1.58 percent in 2000. In other words, the richest of the rich paid more and everyone else paid less.
Examining a Fed study that focuses on wealth rather than income, Bartlett notes,
Looking at all families headed by someone ages 44 to 55, only 11.8 percent have less than $5,000 saved, while 20.3 percent have at least $500,000. Almost 70 percent of Baby Boomers have of net worth of at least $50,000.
In a review of a recent book on the history of the income tax, Susannah Camic comments,
Some Americans firmly embrace the ideal of “justice,” the belief that, in the interest of fairness, resources should be distributed somewhat equally among citizens. In contrast, others hold that wealth comes as a consequence of “virtue”—work, creativity, thrift—and that the wealthy are thus entitled to keep the monetary rewards of their own talent and good behavior.
For Discussion. If you support both “justice” and “virtue,” which taxes are the best and which are the worst?