“What would be the disincentive for state or locals to not increase taxes (up to 50%)”
That’s right, but it’s even more complicated than that. Most of us high income folks have many tax deductions that reduce our total tax burden to something like 20-30%. If we all accept a 50% limit in total then BOOM! You pay 50%! No tax deductions. Which is exactly what Obama is proposing for high income folks, dropping the home mortage deductions and the charitable giving deduction. Really the best system would be the Fair Tax www.fairtax.org, but that is impossible with our current leadership....
“What would be the disincentive for state or locals to not increase taxes (up to 50%). They could always say “You’re not going to pay more than 50%”, so don’t worry about it.”
None, but so what?
Look at what happens now. With our hodge-podge system of taxes, each tax-authority can say “we’re only raising taxes a little”. Local raises it 2%, the state raises it 2%, and the feds raise it 2%. They can all claim the only raised taxes 2%, but the cumulative tax raise is 6%.
I’d love nothing more than having the federal government telling states to LOWER their income tax rates, because they are depriving the federal government of tax revenes.