Despite what many believe, the United States is a place where the highest earners—depending on their state of residence—can face Sweden-like levels of taxation, while the lowest earners have effectively no tax liability at all. Income tax brackets have been ratcheting more progressive over time, as successive administrations have lowered bottom rates while keeping top rates more or less the same. A case could be made for the poor to pay more and the rich to pay less.
Obviously, that is going to go down like a lead balloon. Liberals will squeal if the rich are permitted to pay less, and everyone will squeal if the poor are made to pay more. For the first time since Steve Forbes in the 1990s, there are real discussions about flattening the tax code. In the tax law passed during Ronald Reagan's second term, there were only two tax brackets: one at 16 percent and one at 28 percent—the flattest tax rates have been since the income tax was instituted in 1913. It is worth pointing out that the economy grew strongly in the ensuing years, and tax revenue actually rose as the tax code was greatly simplified and loophole deductions and credits were phased out.
President Donald Trump's Treasury Secretary Scott Bessent has not yet turned his attention to taxes—aside from saying that the 2017 Tax Cuts and Jobs Act will be extended—but it seems a big flattening and simplification is coming if the TCJA is any precedent.
