Here's my first post for Blog of the Century, the blog of The Century Foundation. It looks at a new paper in the current issue of the American Economic Journal: Economic Policy co-authored by Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva. Piketty and company examined data from a number of OECD countries over a period of 50 years to determine the optimal marginal tax rate on the highest incomes.
According to them, that rate should be -- wait for
it -- 83 percent! They find that tax cuts for the rich are
associated with increased inequality and also that there's no evidence that
raising tax rates on the rich slows growth.
In my piece, I argue that dramatic increases in the tax rates on the highest earners are one of the most important items on the anti-inequality agenda. Not only that, "confiscatory" taxes -- very steep progressive taxes with a purpose not so much of raising revenue, but of discouraging bad economic behavior -- are as American as apple pie. As I point out in the the piece, America invented confiscatory taxes, for heaven's sake. Read the entire post for more.