There seems to be an increasingly popular argument that we just need to transfer wealth from the rich back to the poor right? Money for health care. Schools. College. Bank bailouts. Automobile manufacturer bailouts. Failed mortgage bailouts. A new 8-inch Newtonian reflecting telescope on a computer controlled equatorial mount with electronic camera. Balance the federal budget and reduce the deficit and have enough left over to have a really great barbecue party with Wagyu beef. The rich need to stop being such selfish jerks and start paying their fair share.
Greg Mankiw has two recent posts which explain why that might not work.
There is a common perception in some circles that we can solve all our fiscal problems if only we were willing to tax the rich some more. Yet, in reality, there are not enough rich for this to work. By presenting such a skewed cross-section of incomes, Parade inadvertently feeds an all-too-common misperception.
Wait. Are you sure about that? I am sure there are enough rich people if we just tax them heavily enough. From the Washington Post:
What if we raised taxes only on families with couples making more than $250,000 a year and on individuals making more than $200,000? The top two income tax rates would have to more than double, with the top rate hitting almost 77 percent, to get the deficit down to 3 percent of GDP.
But the more relevant question is why would we want to do this?
