http://www.cato.org/…
Key legislators and presidential hopefuls in the Democratic Party have proposed raising the top two tax rates. They’re also suggesting extra surtaxes for war, for alleviating the Alternative Minimum Tax, for Social Security, and for subsidizing compulsory health insurance. Barack Obama and John Edwards advocate taxing capital gains at 28%; Hillary Clinton favors taxing dividends at the surtaxed income-tax rates.
The argument for these proposals has nothing to do with the impact of higher tax rates on incentives and the economy. It is all about “fairness” — defined as reducing the top 1%’s share of income.
This political exercise invariably begins by citing dubious statistics about pretax incomes among the top 1% (1.3 million tax returns) as an excuse for raising tax rates on the top 5%, among others. Echoing speeches from Sen. Clinton, Business Week recently exclaimed, “According to new Internal Revenue Service data announced last week, income inequality in the U.S. is at its worst since the 1920s (before the Great Depression). The top percentile of wealthy Americans earned 21.2% of all income in 2005, up from 19% in 2004.”
These statistics are extremely misleading.
Do all these points Alan Reynolds makes disprove that income inequality in the U.S. is now the worse since the 1920’s? No… but it shows how flexible the numbers are and how easy it is to make them show what you want. With the way our managed economy is being ran it’s no wonder the middle class is disappearing. The system is rigged to go that way.
