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You are here: Home / 5 Liberal Arts / Economics / Raising Taxes by a Certain Percentage Does Not Mean Tax Revenues Will Rise by the Same Percentage

Raising Taxes by a Certain Percentage Does Not Mean Tax Revenues Will Rise by the Same Percentage

July 17, 2009 by mattperman

A good analogy of this fact from the Wall Street Journal:

Mr. Rangel and House Democrats are also banking on the idea that raising tax rates by 20% will raise 20% more tax revenue, but that’s like telling Wal-Mart it can raise prices by 20% and get 20% more profit. When taxes on the rich rise, their reported income tends to decline. The last time the top federal income tax rate was 50%, the richest 1% paid only about 25% of all income taxes. Today, at a 35% rate they pay nearly 40%.

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I am the director of career development at The King’s College NYC, co-founder of What’s Best Next, and the author of What’s Best Next: How the Gospel Transforms the Way You Get Things Done. This is my personal website where I blog on four of my favorite topics: theology, apologetics, culture, and living in New York City.

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