For people with very high incomes, the rise in marginal tax rates would be smaller, but to the extent that itemized deductions rise with income, the loss of those itemized deductions means that the cut in marginal effective tax rates on high income people will be less than the cut in statutory rates.

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People trying to raise themselves out of poverty by earning more can face effective marginal tax rates (including phase-outs of various government programs) that exceed 100%.

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The big gap between the headline and effective marginal tax rates reflects the large number of allowances given to firms for doing particular activities, such as research and development.

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Furthermore, in 1986, the U.S. had one of the lowest effective marginal corporate tax rates for equity-financed investments in machinery and industrial structures in the U.S., and now we have one of the highest.

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That plan would allow Republicans to say they did not back down in their opposition to raising marginal tax rates and Democrats to say they prevailed by increasing effective tax rates on the rich.

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