The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

Sunday, January 6, 2019

Opinion | The Economics of Soaking the Rich - The New York Times

Or to put it a bit more succinctly, when taxing the rich, all we should care about is how much revenue we raise. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue.

And that’s something we can estimate, given evidence on how responsive the pre-tax income of the wealthy actually is to tax rates. As I said, Diamond and Saez put the optimal rate at 73 percent, Romer at over 80 percent — which is consistent with what AOC said.

An aside: What if we take into account the reality that markets aren’t perfectly competitive, that there’s a lot of monopoly power out there? The answer is that this almost surely makes the case for even higher tax rates, since high-income people presumably get a lot of those monopoly rents.


I think Congress should pass a bill requiring all economists who write for newspapers to release their tax returns to the public. Herr Doktor Professor Krugman's would be very interesting, I'm thinking.

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He would seem to have no children - perhaps that's why he's so careless about the future.

Posted by: dearieme | Jan 6, 2019 2:18:07 PM

I think anyone who proposes increasing tax rates should have to experiment on themselves for 5 years to see how it works before foisting it on the rest of us.

Posted by: Stu Buchalter | Jan 7, 2019 5:57:54 AM

Krugman used to be against high tax rates before he was for them. But that was back in the day before he became a "woke" progressive and let his emotions rule his logical brain.

Posted by: JMOD46 | Jan 7, 2019 8:55:35 AM