Economics, Econometrics and Finance
4 years ago

Taxing the Top 1% at 90%: A Game-Changer for Social Equality

National Bureau of Economic Research
High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk
Fabian Kindermann, Dirk Krueger

Paper Summary

Very high tax rates on the top 1% of earners can be beneficial for society's wealth distribution. A model with unpredictable income risks shows that tax rates near 90% for the top 1% are optimal for achieving desired redistribution levels. This result remains consistent even with varying labor supply elasticity and when considering both current and future generations.

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