Senior Fellow Kevin A. Hassett

Several Democratic candidates in the current presidential-election season and the last one have informed voters that the world's problems can be solved if only we would repeal the Bush tax cuts. Ever mindful of the median voter, some, like Hillary Clinton, have been careful to add that only the tax cuts for the rich should be reversed.

The candidates have likely adopted this strategy, rather than one that calls for larger tax hikes, because voters remember the 1990s as generally prosperous times. How much damage could it really do to bring rates back to where they were when Bill Clinton was in the White House?

This approach, however, is extremely deceptive. One simply cannot raise enough revenue to fulfill all of the Democrats' spending fantasies just by reversing the Bush tax cuts on the rich.

This became vividly apparent in late October, when House Ways and Means Committee chairman Charles Rangel released his tax plan. The main thrust of Rangel's plan is a repeal of the dreaded Alternative Minimum Tax. Wary of losing all of the revenue that the AMT is forecasted to raise over the next decade, Rangel increases tax rates on the rich to offset the AMT's elimination.

Since Rangel's tax hikes are focused on the rich, and the AMT is scheduled to draw ever more revenue from the middle class in federal budget estimates, the rate increases necessary to maintain current revenue levels are enormous. Rangel adds a 4.6 percent "surtax" on adjusted gross incomes above $500,000 in the first year of the law. This gives voters the impression that we are simply lifting the current top rate of 35 percent to the good old Clinton rate of 39.6 percent. But in 2011, when the Bush tax cuts expire, the surtax sticks, lifting the federal rate to 44.2 percent. Rangel also grabs revenue from the rich by phasing out exemptions and deductions. Add in the Medicare tax, and average state and local taxes, and the combined marginal income tax rate goes to 52 percent. As the accompanying chart illustrates, that would make our top marginal rate the second highest among the ten largest OECD economies, right below France.

This tax "reform" is revenue-neutral, which means that there is no money left over to fund, say, the universal health-care coverage so many of the Democratic candidates favor. If we lift the top rates to fund that too, then our rate would be far higher than that of any other major country, and begin to approach the 70 percent top rate of the 1970s.

Kevin A. Hassett is a senior fellow and director of economic policy studies at AEI.