Martin A. Sullivan’s article “Busting Myths About Rich People’s Taxes” published in Tax Analysts on April 16, 2012, is a must read. It dispels many commonly held myths about the rich and federal taxes. Here are some statements from the article:
There are good reasons for the government to keep its hand out of the pockets of the wealthy. For example — and this will be a shocker to most liberals out there — it is a basic tenet of tax economics that an efficient system should eliminate all taxes on capital income. . . . That type of thinking recently led Kevin Hassett of the American Enterprise Institute to call the Buffett rule ‘‘the stupid rule.’’ ‘‘It’s basically just a back-door way to hike taxes on capital,’’ . . . To maximize growth, economists would set the tax rate on capital gains, dividends, interest, and all business profits at zero. . . .
Myth #1: The Buffett rule is largely a symbolic political ploy because it would raise only $5 billion a year. . . .
Myth #2: The United States cannot raise taxes on the wealthy because ‘‘there appear to be limits in the real world as to how much tax blood can be extracted from rich turnips’’ and ‘‘the U.S. has the world’s most progressive tax burden.’’
Myth #3: The United States has a progressive income tax.