Raising the top federal marginal tax on earned personal income to 70% (and holding the rest of the current tax code, including the top bracket definition, fixed) would raise substantially more revenue (federal and state, combined) without lowering economic activity.
Responses
Responses weighted by each expert's confidence
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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It will increase substantial revenue. Impact on economic activity is somewhat uncertain, but probably not huge, except through tax avoidance
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 Alberto Alesina |
Harvard | Did Not Answer | Bio/Vote History | |
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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Some increase in revenue but substantial tax avoidance. Modest drop in output due to lab. supply response and tax avoidance.
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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Not my area, but no clear evidence that historically high U.S. marginal tax rates reduced economic activity -- though they raised revenue.
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 Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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 Raj Chetty |
Harvard | Bio/Vote History | ||
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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If Rawls rev max optimal tax is ~70%, that derives from a model in which there is SOME elasticity of economic activity to the tax rate.
-see background information here |
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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More revenue: yes. But there would be at least a small decline in activity from the reduced after-tax incentives.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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I imagine a modest negative impact on activity, given that this would be on top of S&L taxes. But Diamond-Saez & Jones studies disagree...
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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The MPC out of after tax income is not likely to be exactly zero for people in the top bracket.
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 Amy Finkelstein |
MIT | Bio/Vote History | ||
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 Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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 Austan Goolsbee |
Chicago | Bio/Vote History | ||
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Revenue, yes, but with lots of DWL
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Bio/Vote History | ||
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I think it would raise more revenue but would reduce output
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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Revenue would rise, but whether by a lot is unclear because there are many tax loop-holes. I would expect some small disincentive effects.
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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While the evidence from ERTA(1981) & TRA(1986) is not definitive, it--broadly speaking--suggests the opposite: i.e. tax revenue would fall.
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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I dont love the wording of this question particularly "without lowering economic activity".
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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Revenue may be higher, but the impact on output would be substantial. E.g., many will convert earned income to perks or capital gains.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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It will likely raise revenue but also trigger relabeling of income to avoid the tax and reduce some activity. magnitudes hard to tell
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 Pete Klenow |
Stanford | Bio/Vote History | ||
 Jonathan Levin |
Stanford | Did Not Answer | Bio/Vote History | |
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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If the assertion had read "...without lowering economic activity MUCH" I would have agreed. But ZERO decline in activity seems implausible.
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 William Nordhaus |
Yale | Bio/Vote History | ||
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Would induce severe distortions from different tax rates earned v other income, and worse in NY, CA.... Net revenue hard to determine.
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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Some increase in top rate would raise revenue with minimal effects on economic activity; it's less clear how high one could raise the rate.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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Nobody proposes such drastic changes with current brackets; it would have serious adverse effects.
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 Carl Shapiro |
Berkeley | Did Not Answer | Bio/Vote History | |
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Total tax rate would exceed 85% in many states. This is surely on the wrong side of the Laffer curve, especially in the long run
-see background information here -see background information here |
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 James Stock |
Harvard | Bio/Vote History | ||
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Why this question? AOC proposed 70% rate on income > $10M. This is a non-starter, and for good reasons like shifting income to cap gains.
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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Not happy with Q. Raising top rate w/o other changes not best approach. Would raise substantial revenue, but some cost in gdp in short run.
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