Economics Profs Claim Ninety Percent Income Tax Rate Would Help the Rich
It sounds like these professors graduated from the redistributive school of economics.
Christopher White of the College Fix reports.
Ninety percent income tax rate would help the rich, economics professors claim
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Economists at the University of Pennsylvania and University of Bonn argue that the United States would be better off if well-heeled citizens paid the kind of high tax rates not seen since the Eisenhower administration.
According to a working paper by Bonn’s Fabian Kindermann and Penn’s Dirk Krueger published by the National Bureau of Economic Research, going back to the 1950s’ top marginal tax rate of 91 percent could be the elixir to cure the income inequality bug.
Krueger told the Huffington Post a rate “between 85 and 90 percent” makes everybody better off, including people in the 1 percent.
“High marginal tax rates provide social insurance against not making it into the 1 percent,” Krueger said. The Huffington Post said they would primarily fall upon “celebrities, sports stars, and entrepreneurs — people with innate talents that are hugely rewarding, but only for a short period of time.”
If marginal rates are ratcheted sky-high for top earners and low for everyone else, then there is a better than average chance that a typical American will pay very low tax rates, according to Krueger.
Data from a Treasury Department study spanning 1975 to 2005, however, show that the movement between low- and high-income brackets is more complicated than Krueger suggests.
The Treasury study found that taxpayers who were in the bottom 20 percent in income in 1996 increased their income by 91 percent by 2005, and those in the top 1 percent saw their wealth decline.
The study also found that more than three in four working Americans whose incomes were in the bottom 20 percent in 1975 were in the top 40 percent of income earners by 1991. The data also show that only 5 percent of those initially in the bottom stratum were still there in 1991.
Krueger and Kindermann’s working paper also contends that everybody would be better off if the top marginal tax rate which stands at 36 percent, were increased nearly three-foldn people earning more than $250,000.
Other economists told The College Fix that Krueger and Kindermann’s recommendations would disincentivize entrepreneurism.
Ninety percent income tax rate would help the rich, economics professors claim (The College Fix)
Comments
Economics is the leader in looking back pseudoscience. They can never predict anything and therefore have nothing to test. These two clowns look back at the 50’s and are impressed by the great move forward. Of course, the other circumstances are totally different. They along with Mr. Gruber are just not up to the required level to pronounce anything. I continue to be disgusted with the quality of the professors today. They were a lot better 50 years ago.
University economists, is there a more useless group?
Yep, this Administration is MORE USELESS!
[…] know that this (via College Insurrection) sounds self-evidently […]
As a research chemist with more than my fair share of publications, I can tell you the difference between scientific research and economics papers (I dare not call it research because I am not sure what they do with their data). In chemistry, you perform experiments and the data tell you the story. In economics, on the other hand, you have a story you want to tell so you go off in search of the data that will support your story.
When the highest marginal tax rate was 91%, the rich paid less than 35% of the total taxes collected. When the marginal tax rate went down to 35%, they paid over 70% of the taxes collected. High marginal tax rates induce the rich (and most people) to recharacterize their income into tax-favored positions. But there are costs, hassles, and loss of flexibility to do that. With lower tax rates, the rich consider the costs, hassles, and loss of flexibility to be greater than the cost of tax, so they pay more in taxes.
I think everyone would be better off if college economics professors paid 90% income taxes.
Yes, because the French did it and its working out so well for them……
When will the Germans ever learn that all Karl Marx did was get millions of people killed. Stop living in the 19th century and mind your own damn business!
“If marginal rates are ratcheted sky-high for top earners and low for everyone else, then there is a better than average chance that a typical American will pay very low tax rates, according to Krueger.
Wouldn’t it just be simpler to enforce very low tax rates, like a flat tax, and ensure that “typical Americans” would pay the minimum (and not be burdened by reams of tax laws even the IRS doesn’t understand)?
WRONG, the Highest Tax Rate is 39.6%!
No One ever paid 91% – EFFECTIVE Tax rates are MORE telling!
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