Capital gains receipts have nearly doubled since 1995. Cutting that tax remains the one tried and true method of soaking the rich. Real income bracket creep is a natural result of the graduated income tax. Income gains in the past five years have pushed millions of middle-income families out of the 15 percent marginal tax bracket into the 28 percent bracket. Hundreds of thousands of others have been pushed from the 28 percent bracket into the 31 and 36 percent brackets, and so on.
Bracket creep is economically destructive and morally disastrous.
One of its consequences is that, during economic expansions, the government's fiscal intake rises faster than the family's. In the past three years, federal income tax receipts rose at almost twice the pace of wages and salaries. For example, this year income is up a respectable 6 percent, but tax receipts are up 11 percent. This is the real effective tax burden on middle-income working Americans. Thirty-eight percent is way, way too high.