Economics Justice Upriser

Everyone In America Would Be Better Off If We Soaked The Rich

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Economists Fabian Kindermann and Dirk Krueger. believe that a 90 percent tax rate on the top 1 percent of American earners wouldn’t just significantly reduce income and wealth inequality and boost government tax revenues but It would also be the optimal level for Americans’ welfare.

They also find that a 90 percent tax rate on the richest 1 percent could significantly reduce the Gini index, a measure of income inequality.

>In an email to ThinkProgress, Krueger wrote, “One could certainly reduce inequality in the economy to zero, by the government confiscating all income and wealth and redistributing it equally among all households… Of course people would stop working and saving and the outcome would be disastrous.”

>The more is left over, the better is the reform,” Krueger said.

>There are trade offs to such a policy change. About 10 percent fewer people would enter the labor force and consumption would decline in the long run by about 7 percent. But most of this would happen at the very top and not impact most Americans. Average consumption for people who don’t make it to the top 1 percent would actually be higher. Most of the labor force reduction is also among the richest. “Not knowing whether one would ever make it into the top 1% (not impossible, but very unlikely) households would be eager to accept a life that is somewhat better most of the time…and significantly worse in the rare case they climb to the top 1%,” Krueger noted.

The top 1 percent paid an average tax rate of 23.5 percent in 2011, below a peak of 27.6 in 2001. The rate had been dropping for many years, although what they’re paying now represents a slight increase. Either way, though, the rate is much lower than 90 percent.


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“Everyone In America Would Be Better Off If We Soaked The Rich”