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An interesting question is "how far can the US go (in terms of extra tax revenue) by raising taxes on the top 1% — and the top 1% only?"
Short answer is: there's up to $800 billion/year in extra revenue to be collected by taxing the 1% more
Short thread explaining this
Short answer is: there's up to $800 billion/year in extra revenue to be collected by taxing the 1% more
Short thread explaining this
The top 1% earns about 20% of national income today, and has an effective tax rate (all taxes included) of about 30%.
This means the top 1% pays 20% x 30% = 6% of national income in taxes today.
This means the top 1% pays 20% x 30% = 6% of national income in taxes today.
Existing estimates suggest an elasticity of taxable income of about 0.25% for the rich (which could be reduced with stronger enforcement and fewer loopholes)
This elasticity implies a revenue-maximizing average tax rate (the top of the Laffer curve) of about 60% for the top 1%
This elasticity implies a revenue-maximizing average tax rate (the top of the Laffer curve) of about 60% for the top 1%
Of course if the average tax rate of the top 1% was multiplied by 2, their income would fall — instead of earning 20% of national income, they would earn around 16%
So they would pay 16% x 60 % = close to 10% national income in taxes.
That's more or less the tax you can get
So they would pay 16% x 60 % = close to 10% national income in taxes.
That's more or less the tax you can get
10% of national income is 4 points more than today = $800 billion extra per year
Over the 10-year window, that's something like $9.6 trillion in extra taxes that could be collected on the top 1% alone
That's the upshot of rising inequality: there's a lot of $$$ at the top
/end
Over the 10-year window, that's something like $9.6 trillion in extra taxes that could be collected on the top 1% alone
That's the upshot of rising inequality: there's a lot of $$$ at the top
/end
