Taxing higher earners won’t cripple economic growth

In a March 12 letter to the editor, Larry Roche treats us to an exercise in the misuse of information to create a false narrative. He claims that “The top 20% of households earn, on average, $295,900” and “They pay $106,990 in taxes on those earnings” for an effective tax rate of 36.2%. He derives those numbers by using the mean income and tax liability of the top 20%, data that are skewed beyond any sense of reality by the income of the highest earners. According to IRS data for tax year 2020, the average income for taxpayers who constitute the top 20-25% was $93,015. That group paid an average tax of $7,762 for an effective rate of 8.4%

Mr. Roche claims that President Kennedy recognized that confiscatory tax rates collected little tax revenues but stifled growth. He fails to mention that President Kennedy cut the maximum income tax rate from 91% to 70%. If he is suggesting that we can improve our tax system by returning to the income tax rates under President Kennedy we could probably find some common ground.

Mr. Roche implies that imposing a higher tax rate on the top 1% would cripple economic growth. I would remind him that, contrary to GOP rhetoric, there is no evidence that the tax cuts enacted by Reagan, Bush and Trump paid for themselves or that they resulted in massive job creation by the top 1%.

He derides President Biden’s proposal to levy a 25% minimum tax on the wealthiest Americans, expressing concern that he is not sure who President Biden considers the wealthiest of us. Minimal research shows that President Biden has proposed a 25% minimum tax on Americans with wealth exceeding $100 million. I believe most people would consider them to be among “the wealthiest Americans.”