It's election season. Taxes are scheduled to rise sans intervention. Cue heated debates that involve few facts and lots of shouting.
Here, though, are some facts:
Source: Office of Management and Budget.
Tax receipts as a percentage of gross domestic product are extremely low on a historical basis. Most of this is because of the recession -- there's simply less income to tax. But here's another reason:
Source: Tax Policy Center.
Any rational debate on the fairness of raising top tax rates has to acknowledge that current rates are historically low to begin with. The focus shouldn't be on whether top rates go up or down; it should be on the raw level of rates. And right now, they're low. This is very likely why some wealthy corporate elites like Berkshire Hathaway's (NYSE: BRK-A ) (NYSE: BRK-B ) Warren Buffett, Bill Gates Sr. -- father of the Microsoft (Nasdaq: MSFT ) co-founder -- and Netflix (Nasdaq: NFLX ) CEO Reed Hastings have come out practically begging to have their taxes raised.
More specifically, here's Buffett yesterday:
We're going to have to get more [tax] money from somebody. The question is, do we get more money from the person that's going to serve me lunch today, or do we get it from me? I think we should get it from me. I have a lower tax rate, counting payroll taxes, than anybody in my office. And I don't have a tax shelter -- I just take the form and fill out the numbers. I think that's very wrong, and I think that if we're going to get money -- and we're going to need money; we are not taking in enough money at the federal government level ... it shouldn't be [from] the bottom 98%. It should be more from people at the top.
But is that the right thing to do with the economy in the dumps? Here's Buffett again:
If you get $100 billion more of taxes ... from people like me at the top, it means you borrow $100 billion less out of the economy. Somebody has to come up with that $100 billion ... you're taking the money from the economy either way. The only question is whether you take it by borrowing or by taxes. And I see no problem in taxing people at the very high levels significantly more than they're being taxed now. And I might very well cut taxes even further for the people at lower levels.
What do you think? Sound off in the comment section below.