Saturday, November 24, 2012
Aparna Mathur, Sita Slavov & Michael R. Strain (all of the American Enterprise Institute), Should the Top Marginal Income Tax Rate Be 73 Percent?, 137 Tax Notes 676 (Nov. 5, 2012):
In this article, Mathur, Slavov, and Strain respond to the argument by Peter Diamond and Emmanuel Saez that the socially optimal top marginal income tax rate is around 73%, with a range from 54% to 80% [The Case for a Progressive Tax: From Basic Research to Policy Recommendations, 25 J. Econ. Persp. 165 (2011)]. The authors argue that Diamond and Saez’s analysis underestimates the distortive effect of a higher tax rate on real economic choices and embodies judgments about fairness that many Americans may find unacceptable. They also assert that Diamond and Saez’s underlying economic model cannot prudently be used as the basis for specific, real-world policy recommendations.
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