However, Americans at all income levels have enjoyed much, much lower tax rates for many decades now. Most have no memory of the higher rates that our grandparents paid. What is the high point that will cause them to revolt? The newly born Tea Party movement indicates a much lower tolerance for high taxes than an earlier post-WWII generation accepted.

That said, the steady increase in tax rates, even in small increments, should be resisted. Michael LaPrairie, at Wizbang today, discusses the hazard of accepting a little bit more:
“‘A little more.’ It’s always just a little more. We could make such a big difference with just a little more. Problem is, the Federal government takes a little more of your income, then the state wants a little more, then the city wants a little more, then Social Security takes a little more, then property taxes are raised a little more, then sales taxes are raised a little more, then taxes on dividends and capital gains are raised a little more … and pretty soon we are all paying a lot more.”
http://wizbangblog.com/content/2009/03/07/in-new-york-a-different-kind-of-tax-protest-1.php

As LaPrairie says, “and pretty soon we are all paying a lot more.” We could be on the way (at low speed to begin with) to extremely high tax rates once again. Remember that Obama’s dear old dad was a Kenyan economist who advocated tax rates of 100%. I bet Obama thinks that sounds just about right.

It’s also important to note, I think, that Obama’s tax plan is about more than raising rates on those with incomes about $ 250k.

It would also substantially cut back on their ability to take deductions. Which means that their total taxable income will be higher. Which means that their total tax owed will be higher.

I’m not going to say that at the very margins, it won’t make a difference.

But they’re already working those extra hours to turn over $35K of that $100K to the government. Do you really think the increase to $39.6K will make that much of a difference?

I can tell you one thing — everyone I know who makes that kind of money hates the taxes, but they’re too wrapped up in working their ass off for themselves and their family to be slowed by this small of a change.

They’re typically like Hank Rearden before he quits — they are Atlas holding everything up because they simply can’t imagine doing differently. Someday they may withdraw, but I don’t think 39.6% is going to be that day — especially since they were taxed at that level throughout the 90′s without massive levels of executives walking away from their boardrooms.

I see your point, but I think it comes to a matter of opportunity cost and what impact the increased tax rates have on the decisions people make.

If it costs some X amount of hours to earn an additional, say $ 100,000 over $ 250k, and the government is going to take an additional $ 4000-$5000 dollars of that income is it worth their time to work the additional hours only to see more money go to the state ? Maybe they’d rather take the time off and golf, or go on vacation.

That’s a loss to the economy right there, no ?