Quote:Pay More Taxes Now!

William Baldwin, 07.19.10


Smart tax strategy used to mean deferring income. Defer income and you defer the tax bill on it. That gives you, in effect, an interest-free loan from the government.

Now it's time to unlearn the deferral instinct, says Joel Dickson, an economist and investment strategist at Vanguard Group. Look at ways to accelerate your taxable income while postponing your tax deductions. Don't waste any time. You have six months left to make some big moves that could save you tens of thousands of dollars.

Accelerate? Pay early? That sounds nuts. But if your philosophy about how to handle the tax collector was formed a generation ago, it's no good anymore. In Ronald Reagan's heyday interest rates were fairly high and tax rates, for the most part, on the decline. Deferral was smart. Indeed, a whole industry of tax shelters was built around deferral. That's what accelerated depreciation, deferred compensation schemes for executives and those cattle tax shelters of yore were all about.

That was then. Now the time value of money has shrunk. Hold off paying a tax bill in order to invest the cash and what do you get on your money-market fund--maybe 0%?

More important, tax rates are going up. (For more bad news, read Brian Wingfield in "Deficit Moves".) On ordinary income the highest federal bracket will go up from 35% this year to 40.8% next year, including the effect of a clawback on itemized deductions. It's going higher still for investment income like dividends and interest; absent law changes, the maximum rate on such "unearned" income goes to 44.6% in 2013.

The value of deductions is also going up, from 35% in 2010 to 39.6% in later years.

Turn the old rule about timing on its head. Accelerate income (collect that consulting fee in December, not January) and defer deductions (make charitable donations in January, not this Christmas).

What about capital gains? Should you take them this year if you can? Dickson says you should think about it. The maximum federal rate on long-term capital gains on shares of stock goes from 15% this year to 21.2% next year and, thanks to that surtax to pay for health care, to 25% in 2013. If you are sitting on $50,000 of profit on a position you are probably going to liquidate in the next few years anyway, maybe you should do that now.

But don't be too hasty selling winners. Sometimes the smartest thing to do with either corporate or fund shares that have gone up is to never sell them. If you are generous, use these shares for charitable donations; if very patient, hang on until you die. Either way the appreciation escapes taxation.



http://www.forbes.com/forbes/2010/0719/o...s-now.html

Worth a read.

I love the Tax history of the US picture at the bottom of the article…it closely resembles the government on Crack. Congress gave the US the drug in 1913 w/ the 16th amendment, as a TEMPORARY means of raising capital. The average top tax bracket is 62% (and good old Uncle Sam loves to change the income thresholds making more people eligible)...no question which way taxes are going.

73% with WWI
63% with Great Depression
94% with WWII
91% Korean War
75% Vietnam
Down from 70% to 28% under Reagan
The 31% increase for Gulf War cost Bush re-election
Clinton made the top bracket 39.6%
Bush made the top bracket 35%
Obama??? We’ll see….

Quote:Geithner: Taxes on Wealthiest to Rise

By DEBORAH SOLOMON And JOHN MCKINNON

JULY 23, 2010

The Obama administration will allow tax cuts for the wealthiest Americans to expire on schedule, Treasury Secretary Timothy Geithner said Thursday, setting up a clash with Republicans and a small but vocal group of Democrats who want to delay the looming tax increases.

He said the White House would let taxes on top earners increase as part of an effort to cut the deficit.

Mr. Geithner said the White House would allow taxes on top earners to increase in 2011 as part of an effort to bring down the U.S. budget deficit. He said the White House plans to extend expiring tax cuts for middle- and lower-income Americans, and expects to undertake a broader revision of the tax code next year.

"We believe it is appropriate to let those tax cuts that go to the most fortunate expire," Mr. Geithner said at a breakfast with reporters.

Treasury Secretary Timothy Geithner said the Obama administration will allow tax cuts for the wealthiest Americans to expire despite calls from a small group of Democrats to delay tax increases. Kelly Evans talks to John McKinnon in Washington.

His comments came as a number of Democrats, among them North Dakota Sen. Kent Conrad, have begun agreeing with Republicans and some economists who want to extend the Bush-era tax cuts for all earners, including couples earning above $250,000 and individuals earning above $200,000. Sen. Joseph Lieberman, a Connecticut independent, added his voice on Thursday, saying through a spokesman that he was "concerned about the impact of allowing the tax cuts to expire during our fragile economic recovery."

Mr. Geithner said there's "still some uncertainty about how strong the recovery is going to be," which may be affecting spending decisions by businesses and individuals. He discounted that as a reason to extend the tax cuts for top earners, saying most private forecasts show moderate economic growth and increasing public confidence in the recovery.

Pressure is growing on the administration from a small number of Democratic lawmakers to extend all the Bush cuts, which include taxes on investment income and capital gains.

"I think given the fragility of the recovery, the timing is wrong for any kind of tax increase of this nature," Rep. Gerry Connolly (D., Va.) said. "I know that puts me out of step with many in my own caucus, but it's important for members to remember the top 5% [of earners] generates 30% of consumer spending."

Mr. Connolly said there were "lots of conversations going on sotto voce" among House Democrats over whether to extend current tax levels for all earners, not just the middle class.

Federal Reserve Chairman Ben Bernanke told lawmakers Thursday the U.S. "should maintain our stimulus in the short term." Extending the Bush tax cuts "is one way" of doing that, he said. "There are other ways as well."

Many economists say raising rates on top earners could prompt consumers to rein in spending. A Goldman Sachs research report projects the expiration of the tax cuts could shave just under 0.5 percentage points off growth in 2011.



All the Bush-era tax cuts are set to expire at the end of this year, meaning Congress must act if it wants to avoid raising taxes across the board. Political strategists said that could give Republicans an edge, since they could essentially hold the entire package hostage unless Democrats agree to extend the cuts for high-income earners.

"The question is, do Republicans think they can get this to the end game, where Democrats face a choice of seeing an income tax increase on everybody," said Tom Gallagher, a Washington-based analyst with ISI Group, a Wall Street research firm. He speculated that a compromise could include a short extension for higher earners.

A Senate Democratic leadership aide said as of now, neither a partial extension of the Bush tax cuts nor a full extension could win the 60 votes needed to break an expected Senate filibuster. Liberals would try to block a full extension. Republicans would try to block an extension of just the middle-class tax cuts.

House Majority Leader Steny Hoyer of Maryland planned to lay out Democrats' agenda on the economy in a speech Friday. He is expected to criticize Republicans by lumping their support for tax cuts with their opposition to government regulation of Wall Street and the oil industry.

Even if Republicans and centrist Democrats succeed in winning an extension of current tax levels for the next year or two, taxes could be going up after that. A top Republican on President Obama's blue-ribbon fiscal commission, Sen. Judd Gregg of New Hampshire, said tax increases are on the table in the bipartisan panel's negotiations, along with spending cuts.

The administration estimates that allowing tax cuts to expire for upper-income earners would increase U.S. revenue by more than $800 billion over the next 10 years. It also plans to push to reinstate the estate tax to the 2009 level of 45%.

House Speaker Nancy Pelosi of California appeared to back Mr. Geithner in ruling out a compromise. "Our position has been that we support middle-income tax cuts," she said at a press briefing. "The tax cuts at the high end have increased the deficit enormously and…have not created jobs in the eight years of the Bush administration."

Write to Deborah Solomon at deborah.solomon@wsj.com and John McKinnon at john.mckinnon@wsj.com

http://online.wsj.com/article/SB10001424...nalfinance

Just to keep this active thread alive

Here is an example that Barack Obama is trying to avoid so he can be re-elected…

A married couple, (both teachers) are in the top of the 15% tax bracket earning 68K and filing a joint return. Using the 2010 15% tax bracket ($1675 + 15% of the excess over $16750) has them paying $9,362.50 in taxes for 2010.

When the Bush tax cuts expire, then the 10% bracket disappears and the income thresholds change for the 15% bracket. This couple will see their taxes increase by almost 20% because the top income for the 15% bracket becomes $58,200.

$8,730 (58,200 x 15%) + $2,450 (9,800 x 25%) = $11,180…a 19.4% increase in taxes for 2011 compared to the $9,362.50 due the prior year.

(07-26-2010 04:39 PM)SeniorBearcat Wrote:  Just to keep this active thread alive

Here is an example that Barack Obama is trying to avoid so he can be re-elected…

A married couple, (both teachers) are in the top of the 15% tax bracket earning 68K and filing a joint return. Using the 2010 15% tax bracket ($1675 + 15% of the excess over $16750) has them paying $9,362.50 in taxes for 2010.

When the Bush tax cuts expire, then the 10% bracket disappears and the income thresholds change for the 15% bracket. This couple will see their taxes increase by almost 20% because the top income for the 15% bracket becomes $58,200.

$8,730 (58,200 x 15%) + $2,450 (9,800 x 25%) = $11,180…a 19.4% increase in taxes for 2011 compared to the $9,362.50 due the prior year.

That should be easy, exempt union pay from the general tax bracket (apply a special bracket to union members). Why not he has given them free goodies in every other area to assure their support.

If I were in Obama's shoes last year. (President with supermajority congressional control) I would have pushed through a law that made all business "open shops" effective immediately.

Unions would still be free to organize and businesses would still be free to hire union members (and in many cases still would for all the right reasons). But unions would suddenly be forced into competition from both outside and inside their own membership. Because business could suddenly offer them higher pay in exchange for fewer non wage perks and they wouldn't pay dues.

The only question is: which would disappear faster the unions or the democrats?

We would have measurably better schools in less than 5 years.

Taxes are going up for everyone even if the Bush Tax cuts are kept intact. Anyone ever hear of the Alternative Minimum Tax? Perhaps those who are well versed in tax law can explain to others why AMT features an automatic tax increase each and every year for middle class Americans.

The problem isn't just Obama and the Dems, the problem lies with BOTH of the major parties.

(07-26-2010 11:08 PM)Eastside_J Wrote:  We would have measurably better schools in less than 5 years.

Could not disagree more... you want better schools? Get the federal government out. Bush stuck his nose in public schools, and his policies continue to kill those schools from the inside out. Between bad administrations and the federal government, teachers are being forced to teach to tests instead of actually teaching kids what they need to succeed in life.

(07-27-2010 08:29 AM)mlb Wrote:  

(07-26-2010 11:08 PM)Eastside_J Wrote:  We would have measurably better schools in less than 5 years.

Could not disagree more... you want better schools? Get the federal government out. Bush stuck his nose in public schools, and his policies continue to kill those schools from the inside out. Between bad administrations and the federal government, teachers are being forced to teach to tests instead of actually teaching kids what they need to succeed in life.

Because they were doing such a great job educating prior to No Child Left Behind.

Don't get me wrong, I am no fan of NCLB, but it's not like the public schools were doing such a great job before it was implemented.

I think the biggest impact to be made to improve public education would be to remove the NEA. Second would be to force teachers to prove their competence on a continual basis. If they want to be considered professionals then they should have no problem being held to professional standards of competency.

(07-27-2010 08:29 AM)mlb Wrote:  

(07-26-2010 11:08 PM)Eastside_J Wrote:  We would have measurably better schools in less than 5 years.

Could not disagree more... you want better schools? Get the federal government out. Bush stuck his nose in public schools, and his policies continue to kill those schools from the inside out. Between bad administrations and the federal government, teachers are being forced to teach to tests instead of actually teaching kids what they need to succeed in life.

I do agree that teachers are forced to teach to tests. And I agree that testing oriented education is negative in some respects, although somehow having students prove periodically that they can read, problem solve and perform calculations doesn't exactly sound like too bad an idea.

But here is the thing that kills me: I hear teachers complain about having to teach to tests at the expense of broader learning. OK that is fine, and I can see the validity in the argument. But if all you are doing is drilling for test performance, how come test performance scores are so frequently poor?

BTW - The dismal state of our Nations schools has nothing to do with Bush. Although he didn't improve them either. Until you break up the public education monopoly, schools will continue to sink, that is just reality.

If anything increased testing has simply served to illuminate the ongoing failure of poor schools and school districts.

It just doesn't have to be this way, but any success experienced by non-union schools is stamped out with a vengeance. Check out the film "the lottery". here is a WSJ article on it. I guarantee it will give you a completely different perspective on who is to blame for the state of our schools.
http://online.wsj.com/article/NA_WSJ_PUB...55474.html

You can only teach kids who want to learn... if they don't want to learn, and if their parents aren't going to reinforce the fact that they have to learn, what can a teacher do? Honestly, how would you fix Cincinnati Public Schools? The teachers are forced to do more babysitting than teaching due to stupid policies by the administration of those schools. I fail to see where the NEA is involved with that equation. I'd also love to see what objective options there are for grading teachers... if you have a group of kids who don't care then the teachers won't be able to force the kids to learn.

Do you honestly think the teachers are that significantly different in terms of ability between CPS and Sycamore or any other highly rated district? No, the difference is the kids and the parents of the kids. Good parents breeds good kids due to forcing them to learn, while bad parents will allow kids to get away with doing nothing and they will in turn fail.

The article you posted talks about Charter vs Public schools (making it union vs non-union). I noticed they failed to mention the fact that Charter schools are not forced to take the learning disabled kids, the handicapped kids, English as a 2nd language kids, etc. etc., if they claim they cannot handle kids with their issues. Essentially these schools can "pick and choose" the type of student they want. Of course, if a parent is taking the time to sign them up for the "lottery," you can almost guarantee they are one of the good parents who actually give a damn about their kid's education.

They also mention the charter schools that are only there to take money, which happens quite a bit. They may lose their charter after a few years, but by then the damage is done. The kids that they "educated" did not get a true education, but the administrators made their money and probably moved on to start a new Charter school.

I'm not saying there aren't any bad teachers, because there are bad people in every profession. I'm not saying that school districts aren't run inefficiently either. I'm just saying that teachers continue to take the knocks for poor results in the classroom that many (probably most) times are caused due to bad policies by the government and/or school administrators. They also continually are attacked for "only working 9 months a year," where if you truly followed a teacher and the amount of time they put in each you, you'd see that they average more than the 2080 hours that is considered "full time" by the private sector.

For someone who has an issue with a teacher, try following them around for 1 week. I think you will have a new respect for the people who have to put up with crap they do on a daily basis.

(07-27-2010 09:31 AM)namrag Wrote:  Second would be to force teachers to prove their competence on a continual basis. If they want to be considered professionals then they should have no problem being held to professional standards of competency.

Please explain to me an objective way as to how we can grade teachers. Poor students perform poorly on tests, no matter how good the teacher is. Poor students generally come from poor parents... it is that simple.

One last thing... Thanks to NCLB, schools can not kick out the bad kids from school. They MUST allow them back into school at some point, even if they have continually done nothing but cause trouble. The schools are also penalized if they do kick out a kid as they lose funding. Many times a teacher could get through to the students with bad parents if they didn't have to deal with the troublemakers in class, but that is no longer an option in the public school system.

(07-27-2010 10:53 AM)mlb Wrote:  You can only teach kids who want to learn... if they don't want to learn, and if their parents aren't going to reinforce the fact that they have to learn, what can a teacher do? Honestly, how would you fix Cincinnati Public Schools? The teachers are forced to do more babysitting than teaching due to stupid policies by the administration of those schools. I fail to see where the NEA is involved with that equation. I'd also love to see what objective options there are for grading teachers... if you have a group of kids who don't care then the teachers won't be able to force the kids to learn.

Do you honestly think the teachers are that significantly different in terms of ability between CPS and Sycamore or any other highly rated district? No, the difference is the kids and the parents of the kids. Good parents breeds good kids due to forcing them to learn, while bad parents will allow kids to get away with doing nothing and they will in turn fail.

The article you posted talks about Charter vs Public schools (making it union vs non-union). I noticed they failed to mention the fact that Charter schools are not forced to take the learning disabled kids, the handicapped kids, English as a 2nd language kids, etc. etc., if they claim they cannot handle kids with their issues. Essentially these schools can "pick and choose" the type of student they want. Of course, if a parent is taking the time to sign them up for the "lottery," you can almost guarantee they are one of the good parents who actually give a damn about their kid's education.

They also mention the charter schools that are only there to take money, which happens quite a bit. They may lose their charter after a few years, but by then the damage is done. The kids that they "educated" did not get a true education, but the administrators made their money and probably moved on to start a new Charter school.

I'm not saying there aren't any bad teachers, because there are bad people in every profession. I'm not saying that school districts aren't run inefficiently either. I'm just saying that teachers continue to take the knocks for poor results in the classroom that many (probably most) times are caused due to bad policies by the government and/or school administrators. They also continually are attacked for "only working 9 months a year," where if you truly followed a teacher and the amount of time they put in each you, you'd see that they average more than the 2080 hours that is considered "full time" by the private sector.

For someone who has an issue with a teacher, try following them around for 1 week. I think you will have a new respect for the people who have to put up with crap they do on a daily basis.

In the 4 schools the film covers, the students are selected by LOTTERY. I suppose there is some element of cherry picking considering that the 5,000-7,000 families who enrolled for the lottery (for 475 spots) had to at least go through the steps of filling out a basic enrollment form. You do eliminate a bit of the the absolutely uncaring and/or clueless by inserting this step alone.

But with no tests to get in and no other barrier to entry other than having your name drawn, the sample they get should be pretty damn close to average and random (other than the marginal enrollment form weed-out).

There is no way on earth this school should finish #1 in the state (out of 3500 schools) and be able to pass 95+% of their kids in comparison to 51% at the "regular" neighborhood school this same pool of kids would otherwise go to.

I would totally agree with you if these kids had to test to get in, or go through a parent/student interview process. But this is a school that has no control over its applicants and is working with fundamentally the SAME pool of kids as the regular PS schools in the neighborhood.

I have MASSIVE respect for teachers. I had some awesome teachers and a few who literally had no business working with kids and being in a teaching role (for a variety of reasons).

But in any area of human life, (schools, businesses etc) complete shelter from competition creates decay. I know several people who are extremely bright, motivated, caring individuals who are exactly the kind of person we need working with kids as educators and every single of them could hand you a list of people at their own school who have no business being educators. The sad part is that list is usually longer than the "star" teacher list they would offer..

Get rid of what is probably the 20-30% who shouldn't be there and yet will NEVER be let go and pay the rest 20-30% more. Teacher pay is not the problem, the monopoly is.

The issue is that if you take the 20-30% of the teachers away and add their students to the other classrooms many of the good teachers will quit the profession all together. They have a limited amount of bandwidth to get through to the kids as it is... I honestly don't know what the fix is, especially for inner city schools. Until the residents/parents of those communities decide to make a difference it will be an uphill climb for the teachers of those schools.

Back to the original point... You basically restated my point. There are over 1 million students in the NYC public school system, 5000-7000 students is not a very high rate. You can certainly expect that the families that spent the time to try to get into the charter school were among the top 3rd of families, if not the top 5%. Just the fact that they spent the time to register for the lottery (meaning they researched it, took the time to fill out the paperwork, turn it in, then show up for announcement) shows that they are much better than the average parents of the overall school system.

(07-27-2010 02:21 PM)mlb Wrote:  The issue is that if you take the 20-30% of the teachers away and add their students to the other classrooms many of the good teachers will quit the profession all together. They have a limited amount of bandwidth to get through to the kids as it is... I honestly don't know what the fix is, especially for inner city schools. Until the residents/parents of those communities decide to make a difference it will be an uphill climb for the teachers of those schools.

Back to the original point... You basically restated my point. There are over 1 million students in the NYC public school system, 5000-7000 students is not a very high rate. You can certainly expect that the families that spent the time to try to get into the charter school were among the top 3rd of families, if not the top 5%. Just the fact that they spent the time to register for the lottery (meaning they researched it, took the time to fill out the paperwork, turn it in, then show up for announcement) shows that they are much better than the average parents of the overall school system.

No go back and check the article. This is not a New York wide lottery. These kids are from a specific neighborhood. (the charter school they profile shares the same building as the "regular" PS). Students enrolled in the lottery would either go to their regular neighborhood PS or Harlem Success. They do benefit from having a parent that would fill out the form but apparently a huge percentage of the parents actually do so.

Instead of bringing in ACORN plants to protest their very existence, you would think the regular schools would be pretty interested in discovering how they are doing it, wouldn't you?

The answer of course is: Not if you had a monopoly.

OH BTW - Larger class sizes are harder on teachers, but there is no compelling data i have seen that shows smaller sizes are better for students (after about 2nd grade). Class sizes in Japan, China etc are routinely 2X the size of ours or more and they are kicking our butts to the curb academically.

We have underestimated how much teachers matter IMO. An excellent teacher can make a major impact on literally hundreds of kids over a career.

I see nowhere in that article that says the Harlem Success students only come from Harlem. Am I just missing it?

Japan and China kick kids out of schools as they figure out they aren't college material. Totally different situation than the US, as they make sure the kids are interested in being educated. If you start causing problems you go work on the farm, learn to clean, etc... you aren't treated with kid gloves like students at public schools in the US.

I agree about teachers making a huge impact on students, but I'd say it could be with thousands, not just hundreds. In HS, for example, a teacher can have as many as 300 students a year (semester class teacher, 25 kids per class, 6 periods a day).

Quote:A 62% Top Tax Rate?

Democrats have said they only intend to restore the tax rates that existed during the Clinton years. In reality they're proposing rates like those under President Carter.

By STEPHEN MOORE
MAY 26, 2011

Media reports in recent weeks say that Senate Democrats are considering a 3% surtax on income over $1 million to raise federal revenues. This would come on top of the higher income tax rates that President Obama has already proposed through the cancellation of the Bush era tax-rate reductions.

If the Democrats' millionaire surtax were to happen—and were added to other tax increases already enacted last year and other leading tax hike ideas on the table this year—this could leave the U.S. with a combined federal and state top tax rate on earnings of 62%. That's more than double the highest federal marginal rate of 28% when President Reagan left office in 1989. Welcome back to the 1970s.

Here's the math behind that depressing calculation. Today's top federal income tax rate is 35%. Almost all Democrats in Washington want to repeal the Bush tax cuts on those who make more than $250,000 and phase out certain deductions, so the effective income tax rate would rise to about 41.5%. The 3% millionaire surtax raises that rate to 44.5%.

But payroll taxes, which are income taxes on wages and salaries, must also be included in the equation. So we have to add about 2.5 percentage points for the payroll tax for Medicare (employee and employer share after business deductions), which was applied to all income without a ceiling in 1993 as part of the Clinton tax hike. I am including in this analysis the employer share of all payroll taxes because it is a direct tax on a worker's salary and most economists agree that though employers are responsible for collecting this tax, it is ultimately borne by the employee. That brings the tax rate to 47%.

Then last year, as part of the down payment for ObamaCare, Congress snuck in an extra 0.9% Medicare surtax on "high-income earners," meaning any individual earning more than $200,000 or couples earning more than $250,000. This brings the total tax rate to 47.9%.

But that's not all. Several weeks ago, Mr. Obama raised the possibility of eliminating the income ceiling on the Social Security tax, now capped at $106,800 of earnings a year. (Never mind that the program was designed to operate as an insurance system, with each individual's payment tied to the benefits paid out at retirement.) Subjecting all wage and salary income to Social Security taxes would add roughly 10.1 percentage points to the top tax rate. This takes the grand total tax rate on each additional dollar earned in America to about 58%.

Then we have to factor in state income taxes, which on average add after the deductions from the federal income tax roughly another four percentage points to the tax burden. So now on average we are at a tax rate of close to 62%.

Democrats have repeatedly stated they only intend to restore the tax rates that existed during the Clinton years. But after all these taxes on the "rich," we're headed back to the taxes that prevailed under Jimmy Carter, when the highest tax rate was 70%.

Taxes on investment income are also headed way up. Suspending the Bush tax cuts, which is favored by nearly every congressional Democrat, plus a 3.8% investment tax in the ObamaCare bill (which starts in 2014) brings the capital gains tax rate to 23.8% from 15%. The dividend tax would potentially climb to 45% from the current rate of 15%.

Now let's consider how our tax system today compares with the system that was in place in the late 1980s—when the deficit was only about one-quarter as large as a share of GDP as it is now. After the landmark Tax Reform Act of 1986, which closed special-interest loopholes in exchange for top marginal rates of 28%, the highest combined federal-state marginal tax rate was about 33%. Now we may be headed to 62%. You don't have to be Jack Kemp or Arthur Laffer to understand that a 29 percentage point rise in top marginal rates would make America a highly uncompetitive place.

What is particularly worrisome about this trend is the deterioration of the U.S. tax position relative to the rest of our economic rivals. In 1990, the highest individual income tax rate of our major economic trading partners was 51%, while the U.S. was much lower at 33%. It's no wonder that during the 1980s and '90s the U.S. created more than twice as many new jobs as Japan and Western Europe combined.

It's true that the economy was able to absorb the Bush 41 and Clinton tax hikes and still grow at a very rapid pace. But what the soak-the-rich lobby ignores is how different the world is today versus the early 1990s. According to the Organization for Economic Cooperation and Development, over the past two decades the average highest tax rate among the 20 major industrial nations has fallen to about 45%. Yet the highest U.S. tax rate would rise to more than 48% under the Obama/Democratic tax hikes. To make matters worse, if we include the average personal income tax rates of developing countries like India and China, the average tax rate around the world is closer to 30%, according to a new study by KPMG.

What all this means is that in the late 1980s, the U.S. was nearly the lowest taxed nation in the world, and a quarter century later we're nearly the highest.

Despite all of this, the refrain from Treasury Secretary Tim Geithner and most of the Democrats in Congress is our fiscal mess is a result of "tax cuts for the rich." When? Where? Who? The Tax Foundation recently noted that in 2009 the U.S. collected a higher share of income and payroll taxes (45%) from the richest 10% of tax filers than any other nation, including such socialist welfare states as Sweden (27%), France (28%) and Germany (31%). And this was before the rate hikes that Democrats are now endorsing.

Perhaps there can still be a happy ending to this sad tale of U.S. decline. If there were ever a right time to trade in the junk heap of our federal tax code for a pro-growth Steve Forbes-style flat tax, now's the time.

Mr. Moore is a member of the The Journal's editorial board.

http://online.wsj.com/article/SB10001424...op_emailed