The economics of very high taxes

From Bernie Sanders’s Tax Plan Would Test an Economic Hypothesis in the NY Times:

That is, a 73 percent top rate would generate more revenue than the existing tax code, but it would not generate proportionately more revenue — meaning Mr. Sanders’s revenue estimates, based on applying rates to the existing tax base, will tend to overstate revenues available to pay for a plan that is already facing criticism for too-low cost estimates, even if 73 percent is the correct estimate of the revenue-maximizing tax rate.

I don’t normally post anything political on this blog, but this article reviews an interesting issue in economics. How high can you set a tax rate before revenues actually start going down instead of up? And it touches on the subjective issue of what happens when you reach that tipping point. Does “greed” decrease? It’s interesting to think about, though it’s largely an academic argument, since it’s unlikely we’ll see tax rates go that high in the USA, even if Bernie does somehow get elected.

Of course, all the candidates’ tax plans are pretty much nonsense, and would never work as they say they would, even if they could get them through Congress.

And, speaking of Bernie, his appearance on the Late Show this week was pretty good. I’ve been enjoying Colbert’s Late Show, mostly, though some of his new bits don’t really work for me, and some of his interviews aren’t really that interesting to me either. But I’d say about 60% of the show is generally worth watching, and I can fast-forward through the parts that don’t interest me.

The article I quoted from above is from The Upshot, which I’ve been following since I started my Times subscription. It’s a pretty interesting blog that is, apparently, the replacement for Nate Silver’s FiveThirtyEight, since he left the Times back in 2013. is pretty nifty too, and I’ve been following that on and off since it was re-launched under ESPN in 2014.

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