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The Economics of Taxing the Rich

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  • Joel Slemrod

Abstract

How much and how to tax high-income individuals is at the core of many recent proposals for incremental as well as fundamental tax reform. This paper critically reviews the economics literature and concludes that the right answer to these questions depends in part on value judgments about which economics has little to contribute, but also depends on standard economics concerns such as the process generating income and wealth, and whether wealth individuals' economic activities have positive (or negative) externalities. How much and how to tax the rich also depends critically on how they will respond to attempts to tax them because, other things equal, it is wise to limit the extent to which they are induced to pursue less socially productive activities in order to avoid taxes.

Suggested Citation

  • Joel Slemrod, 1998. "The Economics of Taxing the Rich," NBER Working Papers 6584, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6584
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    References listed on IDEAS

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    Cited by:

    1. Austan Goolsbee, 1999. "Evidence on the High-Income Laffer Curve from Six Decades of Tax Reform," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 1-64.
    2. Frydman, Carola & Molloy, Raven S., 2011. "Does tax policy affect executive compensation? Evidence from postwar tax reforms," Journal of Public Economics, Elsevier, vol. 95(11), pages 1425-1437.
    3. Mihir A. Desai & Dhammika Dharmapala & Winnie Fung, 2005. "Taxation and the Evolution of Aggregate Corporate Ownership Concentration," NBER Working Papers 11469, National Bureau of Economic Research, Inc.
    4. Justin M. Ross & Robert R. Dunn, 2007. "The Income Tax Responsiveness Of The Rich: Evidence From Free Agent Major League Baseball All‐Stars," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 639-648, October.
    5. Seth H. Giertz, 2004. "Recent Literature on Taxable-Income Elasticities: Technical Paper 2004-16," Working Papers 16189, Congressional Budget Office.

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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