There are two basic flaws in Gary Clayton's claim that raising taxes on the wealthiest Americans is both fair and wise. First, virtually the entire increase in income among wealthy Americans during the 1980's occurred immediately following the Tax Reform Act of 1986, indicating not so much an actual increase in income as an increase in the accuracy of reporting income. The wealthy were encouraged to report more of their income because of the reduction both in loopholes and tax rates.
Second, no group is in as much control of their income as our top wage earners. Made up disproportionately of doctors, lawyers, business owners and senior executives, they are able to pass on additional costs, taxes included, to their clients and customers. In the end, it is we in the middle and lower classes who end up paying their tax bills in the form of higher prices.
Dr. Clayton's call for higher taxes on the wealthy are based upon faulty analysis of the income changes of the 1980's, will lead to higher prices for all Americans and will help to divert investment funds from the private sector to the government, one of the least productive investments we can make.
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