Monday, March 5, 2012

Why Raising Taxes on the Rich Is So Hard

Washington needs money. The wealthy are prospering. Much of the middle class, meanwhile, is falling behind. Normal patterns of elective politics would suggest that tax hikes on the rich are in the bag.

That's what has happened before. Taxes on the wealthy soared during the Great Depression. After World War II, the top marginal rate went as high as 91 percent, staying there for 14 years before beginning a gradual decline toward today's level of 35 percent. Recent polls show that a solid majority of Americans--between 60 and 70 percent--favor higher taxes on the wealthy to help pay down the national debt and finance other priorities. There's even a group of "patriotic millionaires" who have pleaded with Congress to raise taxes on them and their fellow 0.1 percenters.

But raising taxes, even on a small sliver of people who would barely notice the extra withholding, has landed squarely on Washington's lengthy too-hard-to-do list. Democrats, of course, want to raise taxes for the top income bracket to the Clinton-era rate of 39.6 percent, or higher. But most Republicans are dead-set against tax hikes, even on billionaires, regardless of polls suggesting that they're violating the will of the people. In theory, Republicans are risking payback on Election Day, since voters who feel they're prioritizing the privileged few over the neglected masses could send them packing. Read more.....

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