President Obama has proposed that the wealthy should pay a minimum 30% tax rate, regardless of source. Is this good economic policy?
The answer would seem to be “no”. It will not solve the deficit problem, help the middle class, or spur economic growth. In fact, it will likely dampen potential growth by reducing the incentives to work, save, and invest. If the wealthy are using the tax code to avoid or evade taxes, the law needs to be changed. Indeed, the distortions and immense complexity of our tax system cry out for reform.
Attitudes towards Wall Street bankers, football heroes, movie stars, and entrepreneurs who started with nothing probably diverge widely. But, a tax policy which seems aimed at punishing success is not helpful and is likely to be counterproductive.