Charlie Rangel says that he is revising his tax package to include a reduction in corporate income taxes, to 28 percent, down from the current 35 percent rate. That’s good public policy, even if you’re a liberal. Our corporate income tax rate is the second highest in the developed world and represents a significant drag on the competitiveness of American companies. Cutting the rate will make every company in America more valuable at a stroke and thereby provide a big boost to the stock market.
The down-side of Rangel’s tax package, of course, is tax increases on individuals. Rangel intends to raise individual tax rates to a marginal 44 percent on people making over $200,000. Add in 8.5 percent if you live in a state like Minnesota plus 3 percent for Medicare, and you’re at a marginal rate of 55.5 percent. I don’t know how much that will hurt the economy, but the more important point is that it is grotesquely unjust. No one should pay that kind of confiscatory rate.
PAUL adds: It’s interesting to speculate about the extent to which the Rangel package would increase federal tax revenue. A disproportionate number of people making over $200,000 are capable of retiring now or very soon, and even more will be capable of retiring if the stock market picks up.
It’s easy to imagine lots of these folks retiring a few years earlier than they otherwise would have, rather than staying on in demanding jobs so they can subsidize “tax credits” for folks who aren’t paying any taxes. Retiring pursuant to this thought may strike some liberals as grossly unpatriotic, but that doesn’t mean people won’t do it, or that liberals won’t be among them.
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