Income Mobility And Taxing Upper Income

In all the comments, stories and political speeches about taxing the rich, one point that is almost never mentioned is that in the US there is a lot of income mobility. People in the top income brackets move down into lower income brackets and people in the bottom brackets move up into higher income brackets. Income is not like height or IQ, which are relatively static over time.

Taxing upper income brackets, taxes a lot more people than the numbers in the bracket in a single year, and will be felt by many more people over a decade than the simple percentage numbers of the bracket would indicate. The poor this year are not the poor in the next few years. The rich this year are not the rich in the next few years.

Mark Perry on his Carpe Diem Blog discusses this fact in his post, Movin' Up and Down The Income Quintiles