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Entry: Greenspan's Gambits Link: http://www.takimag.com/site/article/greenspans_gambits#5337 Post contents: JP states: "There is plenty of money forthings like Medicare if the rich paid their fair share of the tax burden..." When I read something like this, I always wonder what the person who wrote it means by "the rich." Does he mean the top 50% of people filing personal income tax returns (who pay 96% of all personal income taxes) - or the top 1% (who pay 36% of them)? Or who? Although the present top marginal tax RATE is relatively low in comparison to some levels at which it was set in the past, the personal income tax BURDEN is still steeply graduated, and the majority of personal income taxes are paid by a relatively small percentage of the population. And what is the "fair share" that ought to be paid by "the rich?" The top Federal income tax bracket is now 35%. It has been as high as 90%. How much of any person's income ought the government to be able to take? Just to put things into perspective, it's not too difficult to find examples of people in the top 1%. The annual income necessary to belong to this group is around $400,000 per year, not beyond the reach of a successful professional or small-business owner. Persons in the top 1% are far more likely to conform to the description given in the book "The Millionaire Next Door" than to be members of the private-jet set. CEOs of publicly-traded companies may have incomes within the top 0.1%, or even the top 0.01%. Several orders of magnitude above them are the Buffetts and Soroses. There simply aren't enough taxpayers of this last calibre to foot the expense of the United States government even if 100% of their incomes were confiscated. It should be noted that the graduated income tax was an idea first proposed by Marx and Engels in the Communist Manifesto. The United States Constitution forbade the imposition of any Federal income tax - graduated or flat-rate - until 1913, when the Sixteenth Amendment was passed. Income taxation has been the great engine powering the growth of the Federal government. Old-fashioned conservatives used to argue for its repeal. Where are they now? I'll conclude by observing that our economic troubles have to do with government spending, rather than taxation. In a sort of corollary to Parkinson's law, spending expands to consume available revenues, and to go as far beyond them as the bond markets permit. Boom or bust, it has been very rare that the Federal government has not run a deficit. The only recent period during which there has been surplus was for a few years during the Clinton administration. The main reason for this was not Clinton's tax hikes, but that by a happenstance of history, the Cold War ended just before Clinton took office. I can remember talk at the time about how there would be a "peace dividend" as a result of lower government spending on the military. This "peace dividend," nonetheless, was never returned to American taxpayers. The government kept it, hence the Clinton-era surpluses. Sent at: 2008 11 22