Taxes and Fairness

There’s this example from a recent Wall Street Journal op-ed.

[I]t is worth noting that from 1958 to 2010, the taxes paid by the top 3% of earners, as a percentage of total personal income (which can’t be reduced by shelters), increased to 3.96% from 2.72%, while the percentage paid by the bottom two-thirds of filers fell to 0.51% in 2010 from 2.7%.

We went from everyone paying roughly the same rates on personal income to some Americans being forced to pay 8 times the rate as other Americans.

And those earlier, higher tax rates that are supposed to be so much more fair?  They were coupled with things like this:

The tax code of the 1950s allowed upper-income Americans to take exemptions and deductions that are unheard of today.  Tax shelters were widespread, and not just for the superrich….

For instance, a doctor who earned $50,000 through his medical practice could reduce his taxable income to zero with $50,000 in paper losses or depreciation from property he owned through a real-estate investment partnership.  Huge numbers of professionals signed up for all kinds of money-losing schemes.  Today, a corresponding doctor earning $500,000 can deduct a maximum of $3,000 from his taxable income, no matter how large the loss.

Now, it’s true enough that the Clinton-era tax rate tables, so beloved of the Progressives today, didn’t allow for such uneconomic activities as write-offs.  But the Clinton-era spending rates also didn’t allow for the spending rates so beloved of the Progressives today.

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