Dylan Matthews on Ezra Klein’s blog offers up this great visual from his Washington Post on changes in tax rates in the US over the last century and leads us into a fascinating discussion on what “optimal” tax rates should be (I suggest you read it for the details).
What these wild shifts in tax policy suggest is that our determination of how much we should tax our wealthiest is not based on any pragmatic assessment of what would result in the best policy outcome, but is rather guided by foundational assumptions about what is fair. If you begin with premise that one has an ethical claim to their “property” if earned legally, then a lower rate seems appropriate. If instead you see taxation as a mechanism for calibrating the distribution of “property” in a way that is optimal for society as a whole, then you can argue, as these economists do, for a much higher rate. These economists disagree. It reflects how ideas matter in policy making. The drift in the last three decades towards neo-liberal assumptions has guided a lower rate, not any inherent sense that our current rate is “better” or “worse” in any tangible sense than it was in the 1950′s.
What do you think is a fair number for the top income bracket? 31%? 39? 73%?