Perhaps he saw the Fox News poll conducted in January that found 65 percent of registered voters liked the idea of raising marginal tax rates
on people earning $1 million or more--and even more support (70 percent) raising taxes on incomes of $10 million or more.
A 70% marginal tax rate
may sound extremely high, and compared to today's tax brackets, it is.
Effective marginal tax rates
indicate the change in profits "taxed" by the combined effect of taxes, social security contributions and any abolition of income-related social transfers.
Table 1 summarizes changes in these weighted average marginal tax rates
Although there has been much discussion on the impact of high marginal tax rates
on tax revenues, there has been little analysis of the role that the lowest tax rates have on tax revenues.
* The plan would significantly increase marginal tax rates
and the cost of capital, which would lead to 9.5% lower GDP over the long term.
Marginal tax rates
are commonly associated with federal income tax brackets.
Similarly, several studies have found a positive impact of marginal tax rates
Padovano and Galli (2002), without making any explicit use of public expenses, also provide empirical results from 23 OECD countries that are in favor of a negative impact of high marginal tax rates
on income, while Arm and Koray (2006) within an environment which makes use of general government expenses, find that income taxation initially increases output but, eventually, it leads to lower levels in income in the long-run.
Indeed, the vast literature examining tax rates and economic growth strongly suggests that marginal tax rates
and GDP growth rates are negatively related.
It said the marginal tax rate
faced by those with an earner between PS50,000 and PS60,000 would rise by 11 per cent for those with one child and another seven for each additional child.
In addition, the study illustrates that the relationship between marginal tax rates
and the tax benefits of deferral is complex.