Tax Rates, 1990 to Now
By David Henderson
In a comment on my post, “From the Vault: My Review of Krugman,” commenter David C writes:
I’d like to point out that on taxes at least, Krugman’s position hasn’t changed from 1990. He still thinks the tax rates we had in 1990 were about optimal. It’s just now tax rates are lower than they were in 1990, so he’s advocating increasing them rather than advocating maintaining them.
I have two responses:
1. I was discussing two ways in which the Krugman of 1990 differs from the Krugman of today. One was his clear analytic method for taking apart an issue. I wrote, “Krugman also notes that the rich families’ gain in income was about 12 times as large as the poor families’ loss, making it impossible for the rich to have grown richer solely at the expense of the poor.” That’s the kind of clear point you never see Krugman making any more.
2. David C is factually incorrect. When Krugman was writing, the federal marginal income tax rate on the highest-income people was 28 percent and the highest marginal tax rate was 31 percent. [This 31% rate was in the “phaseout region” over which people lost various exemptions in a linear fashion as their income increased.] Today, the top rate is 35 percent and Krugman advocates that it be increased.