| "In 1920, when the top
tax rate was 73%, for people making over $100,000 a year,
the federal government collected just over $700 million in
income taxes -- and 30% of that was paid by people making
over $100,000. |
| After a series of tax
cuts brought the top rate down to 24%, the federal
government collected more than a billion dollars in income
tax revenue -- and people making over $100,000 a year now
paid 65% of the taxes. How could that be? |
| The answer is simple:
People behave differently when tax rates are high as
compared to when they are low. With low tax rates, they take
their money out of tax shelters and put it to work in the
economy, benefitting themselves, the economy and government,
which collects more money in taxes because incomes rise. |
| High tax rates, which
very few people are actually paying, because of tax
shelters, do not bring in as much revenue as lower tax rates
that people are paying. It was much the same story after tax
cuts during the Kennedy administration, the Reagan
administration and the Bush Administration. |
| The New York Times
reported in 2006: 'An unexpectedly steep rise in tax
revenues from corporations and the wealthy is driving down
the projected budget deficit this year.' Expectations are in
the eyes of the beholder -- and in the rhetoric of the
demagogues. |
| If class warfare is more
important to some politicians than collecting more revenue
when there is a deficit, then let the voters know that. And
spare us so-called 'deficit reduction commissions.'" |
| -- economist
Thomas Sowell |