Legal Commentary

Raising Marginal Rate On High Incomes Does Not Reduce Productivity

By Big Tent Democrat

Yesterday I commented on a Nate Silver post in which Nate posited productivity losses due to raising the marginal rate on top income earners. Today Paul Krugman explains the issue and answers the questions:

[T]he way I see it, even quite high marginal tax rates on high earners — even rates in, say, the 70 percent range that prevailed pre-Reagan — are unlikely to put us on the wrong side of the Laffer curve by discouraging effort. High earners won’t work much less; they might even work harder, because it takes more effort to make enough to buy that fourth home.

That's the conclusion to the question - in short, Nate Silver is wrong to worry about productivity loss due to raising marginal tax rates. For the full explanation, please read Krugman's post.

Speaking for me only

Full post as published by TalkLeft on August 10, 2010 (boomark / email).