An uncharacteristically subdued Peter Schiff took to the pages of The Wall Street Journal on Friday to explain what he believes is the myth that higher taxes will lead to higher revenues and a general healing of the economy.
The normally outspoken Schiff, CEO of Euro Pacific Capital and author of “The Real Crash: America’s Coming Bankruptcy” who ran for the Senate in 2010, begins by noting Democratic Party leaders, and President Obama in particular, are “forever telling the country that wealthy Americans are taxed at too low a rate and pay too little in taxes. The need to correct this seeming injustice is framed not simply in terms of fairness.”
Higher tax rates on the wealthy, he claims the country is told, would help balance the budget, allow for more “investment” in America’s future and foster better economic growth for all. In support of this claim, like-minded liberal pundits point out that in the 1950s, when America’s economic might was at its zenith, the rich faced tax rates as high as 91%.
“True enough,” he concedes, “the top marginal income-tax rate in the 1950s was much higher than today’s top rate of 35%–but the share of income paid by the wealthiest Americans has essentially remained flat since then.
In 1958, Schiff explains, the top 3% of taxpayers earned 14.7% of all adjusted gross income and paid 29.2% of all federal income taxes. In 2010, the top 3% earned 27.2% of adjusted gross income and their share of all federal taxes rose proportionally, to 51%.
“So if the top marginal tax rate has fallen to 35% from 91%, how in the world has the tax burden on the wealthy remained roughly the same?”
Two factors are responsible, he argues.