8 February 2019

Steve Randy Waldman: “It is reported ad nauseam, when people point out that the US did very well under the high top marginal tax rates that prevailed from World War II through the 1980s, that those high rates were rarely paid. People bring this up as though it was some kind of policy failure. No, it was then and would be again quite the point of the policy. The purpose of very high tax rates at very high incomes is not to generate revenue. It is to make costly the practice of making payments to people who are already very rich relative to other things the payers could do with their money, and so reduce the opportunity cost of doing other things. … Very high top tax rates are a means of encouraging ‘predistribution’ rather than the tax part of tax-and-transfer redistribution.”