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Facebook's Mark Zuckerberg recently declared that he was "cool" with the idea of paying more income taxes. On its face, this might seem like a good idea. Raising the top income tax rate seems like an effective way to make our (already progressive) federal tax system more progressive. Yet as Reason columnist and Mercatus Center economist Veronique de Rugy explains in her weekly appearance on Bloomberg TV, the rationale underlying this policy recommendation ignores the complexities of the United States federal tax system. By separating economic myth from economic truth, de Rugy provides the facts about taxes and spending.
Myth 1: Millionaires who favor of an income tax increase are fiscal heroes.
Fact 1: No, they're not. Many of the rich get the majority of their income in the form of capital gains and dividends rather than ordinary income. They are essentially advocating a tax increase on those making much less money than they do.
Myth 2: Big government means more redistribution to the poor.
Fact 2: Large governments tend to have less progressive taxation than smaller ones.
Myth 3: The doomsday projections about unfunded Social Security and Medicare obligations are overstated.
Fact 3: The unfunded liabilities for Social Security and Medicare exceed one full year of the United States' gross domestic product. That's on top of the spending that's supposedly funded.
For additional info, see de Rugy's article "The Facts About Taxes and Spending." http://reason.com/archives/2011/05/27/the-facts-about-taxes-and-spen
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