Taxing the 1%: Why the top tax rate could be over 80%

Thomas Piketty, Emmanuel Saez, Stefanie Stantcheva, 8 December 2011

The top 1% of US earners now command a far higher share of the country's income than they did 40 years ago. This column looks at 18 OECD countries and disputes the claim that low taxes on the rich raise productivity and economic growth. It says the optimal top tax rate could be over 80% and no one but the mega rich would lose out.

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In the United States, the share of total pre-tax income accruing to the top 1% has more than doubled from less than 10% in the 1970s to over 20% today (CBO 2011 and Piketty and Saez 2003). A similar pattern is true of other English-speaking countries. Contrary to the widely held view, however, globalisation and new technologies are not to blame.

Topics: Poverty and income inequality, Taxation
Tags: Occupy Wall Street, US, wage inequality

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