Later On

A blog written for those whose interests more or less match mine.

Taxing the rich

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Paul Krugman has a blog post that is totally persuasive to me, though I may be missing something:

For my sins (and, yes, an honorarium too), I’m doing this. So it’s worth putting out some of the basics.

First, over the past three decades we’ve seen a soaring share of income going to the very top of the income distribution (right scale) even as tax rates on high incomes have fallen sharply, with the recent Obama increases clawing back only a fraction of the previous cuts:

Inequality and taxes

Second, there is now a lot of hard empirical work on the incentive effects of high top tax rates. None of it shows the kind of huge negative effects that figure so prominently in right-wing rhetoric. In particular, none of it suggests that we are anywhere close to the point where raising taxes on the rich would reduce revenue as opposed to increasing it.

Finally, you can use the results of these studies to estimate the “optimal” tax rate on top incomes; I think the best way to think about what optimality means is, what’s best for the 99 percent, since the 1 percent will be doing fine regardless. And just about everything points to substantially higher tax rates than we now have.

This has nothing to do with envy, or a desire to punish the rich, or anything other than a recognition of tradeoffs: if we choose to raise less revenue from the rich than we can without hurting the economy, we will be forced either to raise more taxes from or provide fewer valuable services to everyone else.

Written by Leisureguy

28 May 2013 at 12:13 pm

Posted in Daily life, Government

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