Here is a good example of why we shouldn’t listen to people complain about tax rates at the upper levels.
This is from a NYT article
Kristina Collins, a chiropractor in McLean, Va., said she and her husband planned to closely monitor the business income from their joint practice to avoid crossing the income threshold for higher taxes outlined by President Obama on earnings above $200,000 for individuals and $250,000 for couples.
Ms. Collins said she felt torn by being near the cutoff line and disappointed that federal tax policy was providing a disincentive to keep expanding a business she founded in 1998.
“If we’re really close and it’s near the end-year, maybe we’ll just close down for a while and go on vacation,” she said.
So here is someone that can choose to give up earning say another 25,000 dollars because she will only get to keep 15,250 instead of 16,250! of that 25K. That is not rational economic behavior. That is a knee-jerk reaction to emotions.
I once had a tax professor that asked the class, would you want to be in a higher tax bracket. He said, of course. It means I am earning more money!