The latest data from the IRS show that as income rises, effective tax rates also rise -- up to a point. The effective income tax rate levels off at 24.1 percent for incomes between $1 million and $1.5 million. For higher incomes the rate declines. For incomes above $10 million the rate is 19.4 percent. See the chart below.

The reason for this decline as income rises is easy to explain. Most of the super rich receive their income in the form of capital gains. Capital gains and qualified dividends are taxed at 15 percent (instead of the top 35 percent rate that applies to other forms of income).

Everybody has different views of "vertical equity" (how people of unequal income should be treated relative to each other). Ultimately, it is not an economic matter but a value judgement. Some believe taxes should be progressive -- with rates increasing with income. (In econo-speak, this is explained as equal marginal sacrifice when there is diminishing marginal utility of income.) Some believe fairness requires equal tax rates for all income. I don't know anybody who on principle advocates the tax system be regressive. Nevertheless, the income tax -- which is commonly assumed to be the mainstay of progressivity in the U.S. tax system is in fact regressive at the high end.

.