When marginal rates are low, the rich become socialists

The Economic Policy Institute created this chart for us. After the federal government takes taxes, the rich get richer. Why is that?

Well the underlying reason is not apparent in the chart, the the problem is that under low marginal rates, the rich can shift firm expenses to the government and come out ahead. That is why it is rich people who push new entitlements, this is taken directly off the firms overhead. It is socialism for the rich and poverty for everyone else who has to pay for the entitlements.

This is why we get less socialism when marginal rates are set such that there is no gain from shifting expenses to government. Hence, Obama needs to get his new entitlement passed b efore marginal raes go up.Reagan could never have expanded government expenses without a tax reduction, nor could Bush. And when Clinton increased marginal rates, the amount of socialism reduced. Bush knew this, Reagan probably didn't have the brains to figure it out. Clinton had the concept forced upon him, but adapted quickly to the effect. Fortunately everyone now knows how this game is played.