Why do the dicussions around marginal tax rates for the wealthy focus on principles rather than percentages?

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The Politicus
Oct 03, 2022 11:45 AM 0 Answers
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When politicians discuss earned income taxes for the wealthy in many western countries, the discussion often focuses on whether out of principle, the wealthy should pay their "fair share." Even critics of higher taxes for the wealthy focus on an abstract principle that lower taxes for the wealthy generate higher economic activity. Irrespective of ones position, wouldn't the discussions be more productive by discussing the percentage tax that the wealthy should pay rather the abstract principles?

If one takes the position that the wealthy should pay their "fair share," that could translate to a marginal tax rate of 30% or 100%. Or if one believes that the wealthy generate economic activity, that position could translate to a -50% or a 0% marginal tax rate. Placing the discussion around, "I think the marginal tax rate for the wealthy should be [insert tax rate here] to ensure that the wealthy pay their fair share?" could lead to more productive discussions.

From a public policy perspective, the tax rate cannot be set based on a principle as it is a quantitative metric. Is it possible that the abstractions are done on purpose by both sides of the political spectrum to appeal to their constituency's ideals?

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  • October 3, 2022