How high should tax rates go? Obama: ‘I don’t have a particular number in mind’

[Valin]

AEIdeas:

James Pethokoukis

July 25, 2014

 

Here is President Obama in a chat yesterday with CNBC’s Steve Liesman:

 

 

STEVE LIESMAN: Mr. President, I just want to pivot back one more time to domestic issues. You’ve said a bunch of times that getting the wealthy to pay a little bit more, and you’ve succeeded in raising that top tax rate to 39% or rolling back the tax cuts. Is there a limit there? Is there a limit to how much you believe the government should take from an individual in terms of a top tax rate?

 

PRESIDENT OBAMA: You know, I don’t have a particular number in mind, but if you look at our history we are still well below what, you know, the marginal tax rates were under Dwight Eisenhower or, you know, all the way up even through Ronald Reagan. Tax rates are still lower on average for most folks. And what that means is that we probably can make some more headway in closing loopholes that folks take advantage of. As opposed to necessarily raising marginal rates.

 

 

Obama’s response raises an interesting question: How high does he think tax rates could go without really damaging the economy? As my pal Liesman asked, what is the limit?

 

The president’s answer certainly suggests, at least to me, that he believes the US is nowhere close to the danger zone. If so, he is merely in sync with top left-leaning economists — such as Peter Diamond, Thomas Piketty, Emmanuel Saez — who argue for top rates in the 70% to 80% range, if not higher. Oh, and at the same time the high-tax crowd would close tax loopholes and increase tax enforcement to limit avoidance.

 

(snip)