Raising Marginal Rate On High Incomes Does Not Reduce Productivity
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.
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