A Modest Proposal - The Top Marginal Income Tax Rate

[TahitiNut]

There's quite a bit of variety in opinions regarding the "fair" rate of federal taxation for the top marginal individual income. No small amount of the disagreement has to do, I believe, with the reason for setting any particular rate and with what it should correlate.

It seems obvious, now that it occurs to me.

The top marginal federal tax rate on individual income would probably most fairly be set at a level matching the relative (to GDP) size of the Federal Debt at the beginning of the relevant tax year, but no greater than 90%. Thus, since the Federal Debt at the end of Federal Fiscal Year 2003 was 62.4% of the GDP for that year, the top marginal tax rate for individual income (both earned and unearned) in any tax year beginning in 2004 should be 62.4%.

In FY1981, the Gross Federal Debt was 32.5% of the GDP. If this tax policy were in effect, that would've been the top marginal rate in 1982 -- 32.5% instead of 50%.

Comments? Discussion?

(The charts below might aid any discussion we may care to have.)

[DBoon]

1. Odd how high the rates were during the 50's and 60's

when the US economy was growing rapidly.

[TahitiNut]

5. ... and the Gross Federal Debt was coming down as a percent of the GDP.

[leftyandproud]

2. what if we actually pay down debt to 10% of GDP?

Would you be consistent and support a top federal rate of 10%?

[TahitiNut]

3. Why not? That would mean nobody paid more than a 10% rate.

I do not, under any circumstances, believe that higher income should ever be taxed at a lower rate than lower income.

[RUMMYisFROSTED]

4. Interesting...

Got a similar formula for the corporate tax rate?

[TahitiNut]

6. My own preference is that it should match.

I see no ethical reason that corporations should ever be taxed at a lower rate than individuals ... individuals who cannot take advantage of the plethora of deductions available to corporations.

[RUMMYisFROSTED]

7. An additional 13% would do wonders.

Interesting idea (still assimilating).

[dumpster_baby]

8. I totally agree, but you are preaching to the choir here

Why not try to get a show on talk radio. You are gonna have to teach the American people about this in order to get Democratic politicians to go along with it. Otherwise, they just keep playing along with the GOP....

Ya gotta spread the word!

[TahitiNut]

9. A choir of mutes?

:silly: