‘OLD SCHOOL” progressives argue that marginal tax rates should increase with income. Their political might in the U.S. has led to a tax code that is steeply progressive. The bottom half of the income distribution pays almost no tax at all. The top 10 percent, by contrast, paid 52.3 percent of all federal taxes in 2004.
This tilt against the rich is accomplished with marginal tax rates that increase as your income does, from 0 to 35 percent. Many economists have argued that high marginal tax rates can be harmful to economic growth, and that steeply progressive tax schemes might not achieve progressive objectives. The costs of lower growth, after all, are borne by someone, and the poor are first in line when suffering is doled out in a weakening economy. These arguments have had little political force, however. Attempts to lower top tax rates are lampooned as giveaways to the rich.
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