A Quote by Richard Thaler
If we think that high marginal tax rates are bad because they distort incentives, the same is then true for tax subsidies.
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Well, I think the reality is that as you study - when President Kennedy cut marginal tax rates, when Ronald Reagan cut marginal tax rates, when President Bush imposed those tax cuts, they actually generated economic growth. They expanded the economy. They expand tax revenues.
High tax rates distort economic decision making, and our corporate income tax rate is one of the highest in the world.
If top marginal income tax rates are set too high, they discourage productive economic activity. In the limit, a top marginal income tax rate of 100 percent would mean that taxpayers would gain nothing from working harder or investing more. In contrast, a higher top marginal rate on consumption would actually encourage savings and investment. A top marginal consumption tax rate of 100 percent would simply mean that if a wealthy family spent an extra dollar, it would also owe an additional dollar of tax.
We need to consider a financial transactions tax. And we need to ask whether the top marginal tax rates are really appropriate, given that the effective tax rates paid by the wealthy are often actually lower than those paid by the rest of us.
The tax code is very inefficient. Both the personal tax code and the corporate tax code. By closing loopholes and lowering rates, you could increase the efficiency of the tax code and create more incentives for people to invest.
Marginal tax rates are the lowest they've been in generations, and all we can talk about is tax cuts.
[High income tax rates] not only check consumption but discourage investment and encourage...the avoidance of taxes [rather] than the production of goods.[...]Our present tax system...reduces the financial incentives for personal effort, investment, and risk-taking.
Tax rates aren't everything with regard to incentives to work. I would probably work at a 100% tax rate next to a nude modeling studio. I'm joking, but you know what I'm saying. There's a lot more to it than just tax rates. It's economics that I do; I don't do nude modeling studio economics. People do respond to taxes.
Local tax increases can cause high-net-worth individuals to move, tax experts said; tax avoidance and tax arbitrage are multitrillion-dollar affairs, and rich people are sensitive to tax rates. But many of the people who move when their home state raises taxes are close to retirement anyway.
If you have to change the law to get more money, that's a tax increase, and Americans for Tax Reform supports all efforts of tax reform, getting rid of deductions or credits, or something that's misclassified, as long as you at the same time reduce rates so that it's not a hidden tax.
We need to lower tax rates for everybody, starting with the top corporate tax rate. We need to simplify the tax code. The ultimate answer, in my opinion, is the fair tax, which is a fair tax for everybody, because as long as we still have this messed-up tax code, the politicians are going to use it to reward winners and losers.
High tax rates that people don't actually pay do not bring the government as much revenue as lower tax rates that they do pay.
Tax rates for the wealthy should revert to Clinton-era levels, both because it is necessary for long-term deficit reduction and because fairness dictates it. Moreover, there is no proof that higher marginal rates dissuade investment, all the rhetoric from the Right notwithstanding.
I can't imagine an argument that says that raising marginal tax rates on high income people, many of whom are business owners, is a recipe for economic growth.
Lobbyists know that a 0 percent tax rate on capital income is not, in fact, the lowest possible rate. There can be negative tax rates. There can be subsidies. There can be allowances for depreciation. Lobbyists are adaptive creatures.
Capital available for individuals to start and expand businesses would increase with regulatory and strategic tax reforms, like reducing marginal rates, repealing the alternative minimum tax, and making the U.S. the most welcoming place for employers to relocate and create jobs.
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