There is an interesting post at the Tax Prof Blog regarding the percentage of taxes paid by the wealthiest 1% and 5% of Americans. Apparently, the Bush tax cuts caused the biggest historical increase in tax payments by the rich ever recorded. The logical question to ponder is why increase the tax rates on the richest Americans when providing tax cuts brings in more revenue for the country? It is similar to an article I read in the WSJ a few weeks back regarding the repatriation of earnings for the foreign subsidiaries of American corporations. A law in 2005 allowed corporations to repatriate earnings at 5.25%, instead of the standard 35% corporate tax rate. Congress predicted revenue of approximately $200 billion from this action, but surprisingly U.S. corporations repatriated $362 billion from foreign operations. Many politicians opposed the measure and predicted a loss of revenue and a tax holiday for corporations. But instead of getting 35% of nothing, the Treasury received 5% of billions of dollars.
Also see this editorial.