July 18, 2009
Los Angeles Times Columnist Tom Petruno Interviews Tax Foundation President Scott Hodge on House Health Care Surtax Plan
"Getting richer on Wall Street? The tax man hopes so"
By Tom Petruno
For those who believe that higher income tax rates will be ruinous to the economy, stocks' rally in the face of the Democrats' surtax plan didn't send the desired message.
The Tax Foundation tried to rally the troops, noting that if Congress goes along with the surtax proposal, the combined top federal and state tax bracket would exceed 50% in 39 states.
Scott Hodge, the foundation's president in Washington, said that move would be "breathtaking" -- and he didn't mean it in a good way.
But after the wealth accumulation by the richest of the rich over the last two decades, while average workers' incomes lagged badly behind, it's hardly a surprise that Americans are in what Hodge concedes is a "redistributive" mood about income.
Though the rich garnered more, they also paid more in taxes, Hodge said. The foundation says the top 1% of income earners paid 40% of total federal income taxes in 2006 (the latest data available), up from 19% in 1980.
If nothing else, Hodge said, government should know by now that it's a mistake to depend more heavily on the often volatile incomes of the well-off, including small-business owners. California, with its extreme reliance on personal income taxes and capital gains for funding, stands as the best example of how not to structure a tax regime, Hodge said.