I won't bother to try and inventory the list of the things Senator Sanders (I-VT) doesn't understand; that list is too lengthy for a blog posting. But I wanted to highlight a fatal flaw in Bernie Sander's Tax-The-Rich philosophy.
What Bernie (and apparently most of his supporters) doesn't understand is that applying a super high tax rate to the top bracket doesn't actually raise more money to the government. The following chart shows the correlation of the top marginal rate for each year since WW2 and the amount of revenue the federal government took in as a percentage of GDP.
Notice that when the top marginal tax rate is in the low 30% range, the actual revenue to the government varies from below 15% of GDP to is high as 20.5% of GDP. And when you crank up the top marginal tax rate to 90%, the range of variation is about the same, with as little as the low 15% range to as high as about 20.5%.
The regression line comparing revenue to top tax rate is nearly flat. In other words, the revenue to the government seems almost entirely unresponsive to the actual top marginal tax rate.
Taxing the rich simply doesn't bring in more money to the government. Government revenue is almost entirely independent of the top marginal tax rate.
Since the pie doesn't get any bigger, does taxing the rich change how the pie is sliced? We'll examine that next.