The Romney fundraiser in the Hamptons continues to inspire much justified hilarity. Matt Yglesias has fun with whining rich people complaining that they are the engine of the economy, pointing out that quite a few of the whiners make their money in ways that arguably does very little for growth — say, by running funds that collect so much in fees that they leave investors worse off.
There is, however, an even broader critique of the whole keep taxes low on jobcreatorsenginesoftheeconomy thing — it doesn’t make sense even when the rich really earn their money.
Read the whole story by Paul Krugman
And since the rich already make so much money, their marginal utility from an extra dollar is very small, so the revenue-maximizing tax also maximizes welfare for society as a whole.
Oh, and we have pretty good evidence on the (small) actual incentive effects of changes in top tax rates, enough to suggest that the optimal rate is in the 70-80 percent range — which is where it was in the 1960s, a decade of very good economic performance.
Tax rates for the super-elite, the top .01%, have fallen in half since Mitt Romney’s father ran for president; or to put it differently, after tax income for this group has doubled due to policy alone. And bear in mind that the US economy flourished just fine under those 60-70% tax rates…