It’s become almost an article of faith among Republicans, but is it true?
Even Arthur Laffer, the guy who invented the “curve” that launched a thousand specious Wall Street Journal op-eds, is ambivalent on the subject.
Now, do really high marginal tax rates have deleterious effects on incentives? Yes, probably. Consider the story of Denmark, where 63% tax rates have caused some Danes to seek work in lower-tax EU countries.
Fortunately, here in the US, FDR, JFK, Reagan, and others lowered marginal tax rates on the wealthy from a staggeringly high 90-something percent to the much more reasonable 30-something percent. We’ve cut taxes over and over again. We don’t need to cut them anymore. In fact we’re wealthy enough that we could repeal Bush’s tax cuts, take taxation back to Clinton-era levels (still below 40% for the top rate) and have revenue for all sorts of awesome stuff like universal health care.