USA Needs 90 Percent Tax

October 23, 2014 Taxation in USA

WASHINGTON D.C. – American taxpayers need to shed their preconceptions about high tax rates and pay a marginal rate of 90 percent, for the good of all taxpayers in the country.

The wealthiest taxpayers in the USA should pay a marginal tax rate of as much as 90 percent on personal incomes, according to information contained in a new working paper released by Fabian Kindermann and Dirk Krueger, researchers from the University of Bonn and the University of Pennsylvania, respectively.

The conclusions detailed in the paper are based on mathematical modelling of the behaviour of the wealthiest 1 percent of taxpayers in the USA, taking into account the elasticity of labour supply among the wealthy, and showed that charging a marginal tax rate of 85 percent to 90 percent on incomes above USD 450 000 per year would provide the greatest benefit to all taxpayers, including those facing the heightened tax rate.

According to the researchers, significantly hiking the top marginal tax rate will significantly decrease the levels of income inequality in the country, while, at the same time, raising the levels of tax revenue collections in the country.

It was conceded in the research that a proposal to raise taxes to 90 percent will invariably be met with strong opposition by some taxpayers, however, it was also noted “…Americans have a well-documented trouble understanding the notion of marginal tax rates” and that that taxpayers need to understand that even though the rate itself may sound high, it is only applied to a small fraction of all earnings.

Photo By: Ervins Strauhmanis

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