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Taxing Top Earners: A Human Capital Perspective

Author

Listed:
  • Mark Huggett

    (Georgetown University)

  • Alejandro Badel

    (St. Louis Fed)

Abstract

We analyze the Diamond-Saez policy recommendation within a human capital model. We calculate the steady-state welfare implications of raising the marginal income tax rate on top incomes from current levels to those in the range of 54 percent to 80 percent. We also calculate the transitional dynamics implied by such a modification of the US tax system.

Suggested Citation

  • Mark Huggett & Alejandro Badel, 2013. "Taxing Top Earners: A Human Capital Perspective," 2013 Meeting Papers 625, Society for Economic Dynamics.
  • Handle: RePEc:red:sed013:625
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    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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