Friday, March 12, 2010

It is a moral abomination, and grossly inefficient as well

Scott Sumner on income taxes:
If we are going to switch to a consumption tax (which is what Krugman claims the Ryan plan is) then the top rate needs to be closer to 40%. But the chart he uses to illustrate this point is meaningless, as it divides taxes by current income, rather than consumption. As a result Krugman makes it look like the rich would only pay 12% under the Ryan plan. Krugman’s not the only one to do this, but it really annoys me when I read this sort of nonsense. I don’t have time now, but this summer I plan a long post on why the income tax is widely misunderstood by progressives.

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