But, I am incredibly tired of tax increase apologists making the elementary economic mistake of conducting infra-marginal analysis.
You know, by saying things like since the tax surcharge only applies to the income ABOVE $1,000,000, all the income BELOW $1,000,000 is not affected and so incentives for these people won't change much.
The argument about tax rates and incentives is a MARGINAL argument. We presumably want the economy to expand, so the question is how does increasing taxes on the marginal earnings of these "most fortunate Americans" affect their future behavior?
At the margin, for people already making $1,000,000 changes in the tax rate on incomes higher than $1,000,000 have a full effect on the incentives of these people. The effect on their incentives to undertake further economic activity (expand their business, work more themselves) is NOT mitigated by the fact that the tax rate has not risen on the income they are already making!!
If you make $999,999 the tax increase would not affect your current liabilities under your current business plan. That is clearly true. But it does fully affect any decisions by such a person about future actions.
If we want to sock it to these "most fortunate Americans", by all means let's do. But let's not think that the fact that it's a marginal tax rate increase means that it will have an attenuated effect on their future economic activity.
PS: another bogus argument is to refer to the proposed increase as a "modest 3.25 percent surcharge". It's a 3.25 percentage point increase. If the current top rate is 35%, then the proposal is actually a 9.3% surcharge.
Hey Treasury department: Do what you want to do. Just stop lying about what it is you are doing!