It’s been clear for a while that taxes on top incomes went up significantly in 2013; but we’ve had to rely on estimates of the change, not actual numbers. Now the actual numbers on income taxes are in, and sure enough, fairly big hikes at the top.
No doubt this has caught some crony rich (though they are most likely to engineer benefits for themselves) but it has also likely to have caught a lot of decent people who just happen to be very productive and raise the standard of living for all of us.
-RW
Anyone who falls for this doesn’t understand how cronyism works. Higher tax rates on the rich is broken-window style, seen vs. unseen misdirection. A focus on tax rates, which are just a percentage of reportable income, ignores the overall picture of tax amounts paid vs gain amounts received.
ReplyDeleteThe rich employ powerful mechanisms to slash their reportable personal income to a small fraction of their actual gains.
For example, imagine the value of a cronyist’s international business interests increase by $50,000,0000 this year because his lobbyist got his protections inserted into the Trans-Pacific Partnership. This $50,000,000 is an unseen extraction of wealth from the common man by invisibly raising the prices of goods. To enjoy some of these gains, the cronyist’s company buys a $10,000,000 corporate jet he can use to fly around the world in style.
Meanwhile the cronyist is publicly seen paying a higher tax rate of 25% on his $500,000 in reportable income instead of 20%. The extra $25,000 in taxes is a rounding error. Actually, a marketing expense - best spent ever. It enables Krugman and the media to throw their credibility behind defending the current system, citing the higher tax rate the rich pay to flog the common man into stifling his outrage and accepting his worsening financial condition as necessary and fair.