This is from the LA Times:
"Last week, the figures for 2007 were quietly made available, and, as David Cay Johnston, who formerly covered tax policy for the New York Times and now teaches at Syracuse University's law school, points out, "The incomes of the top 400 American households soared to a new record high in dollars and as a share of all income in 2007, while the income tax rates they paid fell to a record low."
Between 2006 and 2007, according to the IRS, the average income of the country's 400 top taxpayers rose 31%, from $263.3 million to $344.8 million. At the same time, their effective income tax rate declined more than half a percentage point, from 17.17% in 2006 to 16.62% in 2007."
That's less then most of us earning a small percentage of those amounts pay.
The main problem in the future that I, and many others, see is that fewer and fewer people will be subject to any kind of federal tax leaving a smaller base to pay more taxes. I can only speak from my own experience, but my first full year of work was 1969. Beteen my wife and myself we earned about $11,000. Our federal tax burden (not marginal rate) in that year was 19.5% (being OCD helps in record keeping). I'm not including state taxes as we lived in NYC and they are and were really high and I know that there are far cheaper places to live. It wasn't until 1985, 26 years later, that our federal tax burden again rose to 19.7% - on an income 10 times what we earned in 1969. Of course, we did have two extra dependents by that time plus many itemized deductions, but I agree with YTG that tax burdens have steadily and continuously decreased over the years. Our current federal burden is about 20% (haven't completed our taxes yet) on the highest adjusted gross income we have ever had (and we have no dependents anymore).
All that being said, as the number of people not paying any federal taxes (except SS and Medicare) continues to grow, those earning over $100K (and probably lower as time goes by) will see their tax burden continue to grow as a percentage of income. Sure, it starts with raises for incomes over $250K, which is a tiny percentage of the population, but it will have to dip to lower levels as the government fails to raise enough revenue. I believe in a progressive income tax, but I also believe that everyone needs to pay something or they have no stake in the system. I also agree with those who said that raising taxes on small businesses kills the job engine in this country. I work for a small business and the owners are not what I would call rich.
I'm not an economist and can only draw conclusions from what I observe. I am drawn more and more to the concept of a flat tax with no exemptions (except a poverty level base) for anything. If people want to have children, that's their decision (we chose to), if they want to own a house, that's also their decision. I would also do away with all tax free income - no more muni bonds or the equivalent. No loopholes of any kind - a simple half page tax return - what did you earn, here is the tax rate, this is what you paid, this is what you owe. No speacial rates for dividends, stock transactions, etc. No Roth IRAs, no exemptions of any kind. Will it ever happen - no.
End of diatribe.