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2010-02-17 06:25 pm (UTC)
I'd be interested in seeing those calculations. I would think that there wouldn't be an actual optimal rate that would apply in general to all situations. I mean, first of all, I'd think that a graduated tax system could be better optimized than a flat tax, and would probably give you a lot more leeway to have a really high top tax rate.
Second of all, though, I'd imagine that the particular economic situation would have a big effect which tax rates are optimal. If you're in a situation like now, where we have a serious demand problem, and there's plenty of easy money available but nobody wants to spend it, we'd probably be better off with really high marginal tax rates. But in (hmm, interesting) a stagflation-type situation, where you have to raise interest rates in the face of a poor economy, it might be appropriate to lower top income tax rates in order to encourage investment.
But yeah, I'd think that if you have to err on one side or the other, the social benefits of a high marginal tax rate for high earners makes it the obvious candidate.
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