So, What's the Problem?

Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. This analysis finds no conclusive evidence, however, to substantiate a clear relationship between the 65-year reduction in the top statutory tax rates and economic growth. Analysis of such data conducted for this report suggests the reduction in the top tax rates has had little association with saving, investment, or productivity growth. It is reasonable to assume that a tax rate change limited to a small group of taxpayers at the top of the income distribution would have a negligible effect on economic growth.  (Summary page)

However, the top tax rate reductions appear to be correlated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. The statistical analysis in this report suggests that tax policy could be related to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities. (p. 17)

Thomas L. Hungerford
"Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945"
Congressional Research Service Report, December 12, 2012

It seems simple enough even for those of us who aren't great at math or trained in economics.  Higher tax rates on the wealthy do not negatively impact economic growth.  They do, however, contribute to greater income disparities. They are unfair.  These conclusions are based on data.  The data is not red and it is not blue.  It just is.  We have a pressing need to better help the people who struggle at the margins of society.  We face a desperate need to invest in ways to reduce greenhouse gases and clean up pollution. Our national infrastructure is crumbling and increasingly unsafe.   We thus need increased revenue, and we can get some of it from raising tax rates on people who clearly can afford it without any negative repercussions for the nation.  So, what's the problem?