How Much Should We Soak the Rich?
There’s broad agreement among the political left in most developed states that we should raise taxes on high earners, if not now then after the economy recovers. The justifications vary somewhat, depending on how one comes at one’s leftism, but in most cases it can be boiled down to the principle of diminishing returns, which holds that the more money you have, the less utility additional money buys you. A homeless person almost always benefits more from a dollar than does a rich person, and if we are seeking to maximize welfare, it is reasonable to redistribute wealth from the rich person to the homeless person. Even some right wingers agree to this, in theory. The trouble is that there is much disagreement as to the extent to which we ought to redistribute empirically. That’s the question I’m going after today.