Reply #70: No, there is nothing being ignored.

[ProSense]

Your equation:

Lets say someone makes 1M. Under scenario #1 they have $600,000 in "legitimate" deductions, resulting an AGI of $400,000 and pay 80% in taxes:

400,000 x 80% = 320,000 in taxes.

Under scenario number 2, they have 100,000 in deductions and pay 35%:

900,000 x 35% = 315,000 in taxes.

As a percentage of total income, they are paying about 32% in both scenarios. This is what happened with the tax act of 1986. MANY MANY deductions were eliminated and tax rates were lowered. If you raised taxes to 80% today and left deductions where they are at, you are in a MUCH different place:

900,000 x 80% = $720,000 in taxes.

You're explaining the impact of deductions, and "legitimate" deductions vary.

The whole point is that loopholes impact the effective rates.

Under scenario 2, if they have 200,000 in deductions and pay 35%:

800,000 x 35% = 280,000 in taxes.

It matters.

On edit: The tax rates are also progressive, a person earning $1 million would only be paying the top rate on the amount over the threshold of whatever bracket they end up in after deductions.