One of the flaws of steeply progressive taxation is about to be exposed. One percent of the taxpayers now pay more income taxes than the bottom 95%. It is pretty clear that major corporations and high income individuals, green shoots notwithstanding, are experiencing massive declines in profits and taxable income. In fact, the annual profits of the S&P 500 are going to zero for the first time.
The titans of industry and finance will have large declines in taxable income...along with many many other high income individuals. Goldman Sachs and AIG bonuses just won't be enough to make up the difference.
What this means is much lower income tax collections for the federal (and many states) government. I'll repeat that...much lower tax collections. Because of our reserve currency status the Treasury and Federal Reserve can print up the necessary money. But this is a dangerous shell game when you consider what may happen to the purchasing power of paper money and the value of long term bonds and notes. We could wake up some morning with a financial crisis that could make September 2008 piddling by comparison.
The Hedge Tax pevents financial malfeasance by our government and the citizens that support it with their votes. We need it now more than ever.