There has been some confusion as to how tax brackets are applied.  A given rate applies only to income within a bracket.  For example, if someone makes one million and one dollars in a year, the higher (70%) rate applies only to the dollar.  The lower rates apply bracket by bracket to the million dollars.  There is not a situation where someone makes an extra dollar putting him in another bracket and he has a substantial increase in his income tax.  This procedure is the same as the current system.
 

Too much?

Well, in 1963, the top rate was 91% and it applied to income above $400,000. The top rate was 70% (above$215,000) at the start of the Reagan Administration in 1980.  The Reagan tax breaks for the rich brought the top rate down to 28% and produced a deficit of $200 Billion.  See top tax rate tables.

In my proposal, the top rate is on the adjusted gross income above $1 million - after deductions for mortgage, charitable donations, etc.  Let's look at some examples.  A person with $100,000 keeps $80,000; $500,000 keeps $300,000 ($6000/wk after taxes); $1 million keeps $500,000 (10,000/wk); $5 million keeps 1.7 million ($34,000/wk);  $10 million keeps $3.2 million ($64,000/wk).

Someone has to pay taxes.  I think it is better to take it from the conspicuously wealthy than from the desperately poor who may not eat as a result or the middle class who may not be able to educate their children or buy health care.  The wealthy will continue to live very comfortably.  In some cases, they may not be able to wield as much power - probably a good thing.

As I say elsewhere in this website, this redistribution of money will help the economy.

Few if any of the $1 million plus class can be described as having earned their income.  Many are part of the CEO, Board of Directors, and associate groups which have gained control of corporations.  They seem to have little expertise in anything having to do with successfully running a corporation.  (Enron's CEO, Ken Lay, proclaimed his innocence before a Congressional committee by declaring his complete ignorance of all corporate matters.)  The only expertise they seem to have is in downsizing for short term profit and long term disaster.  The boards of directors are supposed to oversee the operations, preventing unethical acts among other things.  Instead, they typically share in the loot and look the other way.

The 3/26/06 60 Minutes reported a hedge stock fund CEO received $500 million salary for merit.  He is accused of paying an "independent" stock analysis company to write a bad report on a company which the hedge fund had sold short.  Further, he got them to delay the report while he increased his position.  My tax proposal would reduce his larceny from $9.6 million to $3 Million per week.  We should add free room and board at a federal prison for him.

I know that these increased taxes may be discouraging to greedy CEOs and friends who have expended a lot of effort to get in position to loot their companies.  They may get discouraged and not steal as much, or they may give it to charities to get their names on buildings.  These are not all bad things.  My fondest hope is that they realize that grabbing large sums of money is not the way to happiness or salvation and expend their efforts in making their companies successful.

The present situation attracts the wrong kind of person (aka thief) to the top of our companies.  We need the intelligent, careful, objective person with a strong sense of integrity and community who dedicates his or her efforts toward the long term success of the company, its workers, and the society of which it is a part.  We have gotten that in the past.  Henry Ford recognized that workers needed to have decent wages to afford Fords.  Despite his strange personality, NCR founder John Patterson shut down his operations to build boats and otherwise lead recovery efforts during and after the 1913 flood.  He endowed many community projects over many years.  In contrast, a more recent NCR CEO (recipient of many millions), declared that he and NCR had no requirement or intent to support community programs.   Lower pay for CEOs would get us a better class of people as CEOs.

Lets look at the alternative to my proposed tax rates.  The $10 million guy keeps $7 million ($140,000/wk - 500 times the gross pay of a worker making $7/hr) by current tax laws.  We keep the $400 - $600 billion deficit. A large and growing number of families will not have health care.  The rich will get richer and the poor poorer.  It will be a question of which happens first: 1) A financial collapse due to the national debt or 2) A revolution.  We may survive 10 years.  (With FairTax we won't.)