Main Text of Letter (in case the scan is too blurry for you to read easily):

     According to Internal Revenue Service data, the top one percent of earners paid 19.05 percent of total federal income-tax payments in 1980. That was when the top marginal income-tax rate was 70 percent. In 1997, with a top rate of 39.6 percent, the top one percent paid 74 percent more -- 33.17 percent of all individual income-tax payments.

     The fact is, higher tax rates don't equate to higher tax payments. Rates that are too high merely encourage people to shelter more income, or even earn less. It is more important to set tax rates at a level that is both fair and conducive to economic growth.

     For these reasons, and because the federal government is expected to take in substantial surpluses for the foreseeable future, I support an across-the-board reduction in income-tax rates.

Senator Kyl contends that "the top one percent paid 74 percent more" after the top tax bracket was dropped from 70% to 39.6%, presumably because they are not as motivated to shelter their income.

• It appears that by "more" he means a larger percentage slice of the total tax pie, rather than a larger total amount of money. Did the top 1% really increase their total tax payments when the rates dropped?  That's implausible on the face of it.  The only way his statistics can work is if their share is a larger slice of a much smaller pie.  Senator Kyl says, "higher tax rates don't equate to higher tax payments."  What is more true is that a higher percentage of all taxes paid does not equate to higher tax payments.
• How much of the reduction in taxes was offset by reductions in services that benefit the poor or the population at large?  And furthermore, how much of the reduction in income taxes was offset by increases in more regressive forms of taxation (such as Social Security tax)?
• Senator Kyl's argument is misleading in another way.  It switches between two categories: the top 1% of earners and the former 70% marginal tax bracket. Not everyone in the top 1% was in the 70% tax bracket. The top 1% starts at a few hundred thousand dollars and climbs into multiple billions. One is left to wonder how those in the original 70% bracket fared.
• The underlying premise, that if the rates are too high, high earners will me more motivated to shelter more of their income "or even earn less"(!) is ludicrous. High earners will always be motivated to shelter as much of their income as the law allows, regardless of whether the tax rate is flat, progressive, regressive, high, or low.
• Senator Kyl says, "The fact is, higher tax rates don't equate to higher tax payments."   All else being equal they would in fact equate to higher tax payments.  The reason things didn't stay proportional is not because the grateful rich are less concerned with sheltering their money, but because as part of the tax rate reduction deal a lot of loopholes were closed.  The tax rate reduction was bought politically (made more palatable) by closing some loopholes to moderate the effect.  Loopholes, of course, tend to creep back in with time, so the Reagan era tax reduction package was still the bargain of the century for the rich.
• Tax rate reductions do not close loopholes.  A flat tax will not simplify the tax code.  These kinds of arguments are patently false: they are the political equivalent of bait-and-switch.  The rate (or the rate structure) has absolutely nothing to do with the number or type of loopholes.  If Congress really wanted to close loopholes or simplify the tax code it could do so apart from changing the rate structure.
• What is the real cost of the "tax surpluses" mentioned in the last paragraph? What programs will be going unfunded or underfunded to enable this money to be labeled a "surplus"?

A truthful analysis of the effect of a tax reduction would be to tell us how it would affect the distribution of wealth: whether the net effect would be to transfer wealth up or down the scale.

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