Krugman: 'We can and should raise this lucky elite's taxes'
Source: The Globe and Mail
By Paul Krugman, Special to The Globe and Mail
... The share of income accruing to a small number of people at the top – the famous “1 per cent,” of course, but the top 0.1 per cent has done even better – has soared. You can argue that we were always more of an oligarchy than we liked to imagine, but we are much more oligarchic now than we used to be.
Why is this happening? What can and should we do about it? Those are much disputed questions. One thing is clear, however: We can and should raise this lucky elite’s taxes.
... The U.S. economy boomed for a generation after the Second World War, delivering a rise in middle-class living standards never seen before or since, even though the wealthy faced tax rates that would be politically inconceivable today. Bill Clinton’s tax hikes didn’t prevent an extraordinary jobs and productivity boom.
... You will, of course, hear claims that raising taxes on the wealthy won’t even yield increased revenue – that the “job creators” will go on strike, or hide their income from the tax collectors. However, researchers have studied the revenue effects of tax hikes (and cuts) about as thoroughly as any topic in economics, and the evidence is decisive: Increasing top tax rates from their current level would lead to substantially higher revenue. At a sufficiently high rate – the best estimates put it above 70 per cent and possibly as high as 80 per cent – further increases would be self-defeating; but we’re nowhere near that point.
Read more: http://www.theglobeandmail.com/report-on-business/paul-krugman-we-can-and-should-raise-this-lucky-elites-taxes/article12246297/