In Tax Cut Plan, Debate Over the Definition of Rich
Much of the debate about whether to extend the Bush tax cuts has focused on big economic issues: how the decision might affect the fragile economy, the widening federal deficit and hiring by small businesses....
Today’s tax code not only has far lower rates than it had a half century ago, it has fewer brackets — just six. Mr. Obama’s plan would raise the top bracket (which affects income for individual filers who earn over $382,550) to 39.6 percent, from 35 percent. It would also raise the second-highest bracket to 36 percent, from 33 percent.
Mr. Obama’s plan would charge the same rate on the 382,551st dollar of earnings as it would on the 30 millionth.
Tax brackets at the upper end of the income scale were not always drawn so broadly. In 1970, when someone earning $37,000 had the buying power of a $200,000 income today, there were 25 income brackets. The taxpayer with $37,000 was taxed at the middle of the scale — 13 of the brackets charged higher rates to those with higher income.
Congress reduced the number of brackets in the 1980s in an effort to make the tax code simpler and to cut down on the abuse of shelters and deductions.
In the last 30 years, however, the percentage of total income earned by the top 1 percent of Americans has grown sharply — to 23.5 percent in 2007, from about 9 percent in 1979. And the income share of the top 0.1 percent has grown even faster — to 6 percent in 2007 from 2 percent in 1988....
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Today’s tax code not only has far lower rates than it had a half century ago, it has fewer brackets — just six. Mr. Obama’s plan would raise the top bracket (which affects income for individual filers who earn over $382,550) to 39.6 percent, from 35 percent. It would also raise the second-highest bracket to 36 percent, from 33 percent.
Mr. Obama’s plan would charge the same rate on the 382,551st dollar of earnings as it would on the 30 millionth.
Tax brackets at the upper end of the income scale were not always drawn so broadly. In 1970, when someone earning $37,000 had the buying power of a $200,000 income today, there were 25 income brackets. The taxpayer with $37,000 was taxed at the middle of the scale — 13 of the brackets charged higher rates to those with higher income.
Congress reduced the number of brackets in the 1980s in an effort to make the tax code simpler and to cut down on the abuse of shelters and deductions.
In the last 30 years, however, the percentage of total income earned by the top 1 percent of Americans has grown sharply — to 23.5 percent in 2007, from about 9 percent in 1979. And the income share of the top 0.1 percent has grown even faster — to 6 percent in 2007 from 2 percent in 1988....