According to this White House press release, the federal government is ringing in the new year by simultaneously raising tax rates (i.e., penalizing people for working) and extending payments to two million people who do not work (i.e., rewarding people for playing Xbox). Has this ever happened before at any time in the history of the U.S. (or anywhere else in the world for that matter)?
[Separately, this might be a good time to look at Gregory Mankiw’s October 2010 calculation of his total marginal tax rate as 90 percent (nytimes). Mankiw had already budgeted for the 39.6 percent federal tax rate. He also had budgeted for the 3.8 percent Obamacare supplemental income tax. Mankiw estimated that estate taxes would be 40 percent at the time of his demise, but with the federal estate tax increase to 40 percent and the Massachusetts estate tax rate being 11.2 percent, Mankiw’s 2010 estimate overstates the amount that his children will receive. Instead of $1,000 it will be closer to $830 and the overall tax rate will be 92 percent rather than 90 percent. Mankiw did not say what his children will do with the money. If they spend it here in the U.S., they will likely be subject to a European-style value-added tax (the U.S. can’t run a European-style welfare state forever without European taxes) of around 20 percent. So the $830 will really be $664 and Mankiw’s marginal tax rate is 93.3 percent.]