"Arguments for Tax Cuts Weaker Than in the Past" (Jan. 17) says the case for tax cuts is not as strong as it used to be because the Reagan tax rate cuts and those since have shrunk the tax on dividends.
But the argument is that dividends should not be taxed at all at the individual level.
Corporations pay tax on their income at a 35% rate, then pass what is left to shareholders. Why should shareholders be taxed on income that has already been taxed? That is double taxation.
To say that shareholders should be happy that the second tax is not at the 70% rate is ridiculous. If the second tax is wrong, the rate is not pertinent.
George W. Carlyle
Assessing the decline in national mood in favor of tax cuts is one thing. Attempting to explain it with a chart showing the highest marginal rates since imposition of the income tax is fatuous.
Comparing the top marginal tax rates of 1950 and 1986 without comparing the "tax base" of the wealthy in those years is like comparing apples and oranges.
First, adjusted for inflation, the top rates kick in much earlier today than they did, say, in 1958.
Second, there were numerous loopholes available to the wealthy in the 1950s and '60s -- prepaid interest deductions, an unlimited charitable deduction, opportunities for capital gains, the ability to skip estate tax levies for several generations, more favorable treatment of compensatory stock awards and on and on.
There was no alternative minimum tax.