Judge Posner has an interesting blog post entitled Taxing Wealthy People More Heavily. One of his arguments against increasing the taxes on people with a million or more in income is that they would then have a strong incentive to keep their income under a million. I hadn’t understood President Obama’s proposal of 25% on such incomes to refer to 25% on everything made that year; but maybe he did. I figured he was referring to a marginal tax rate – income, regardless of the source, in excess of a million at 25%. That would, I think, negate one of Judge Posner’s arguments against increasing taxes on high incomes.
He disregards proposals to switch to a consumption tax for practical reasons:
While there are good theoretical arguments for replacing income with consumption taxes, as discussed by Becker, the administrative and transitional costs would be staggering; and so with any effort to overhaul the federal income tax system rather than just tinker at the edges of it.
He also describes a tax on wealth (as opposed to income) as “an uncommonly silly idea.”
My proposal is simply to revert to the Clinton-Gingrich era tax structure. We know that it worked better than the present structure in terms of funding the government, and I don’t recall folks at the time crying out under the oppressive boot heel of communism.