I missed this post by Brad DeLong when it was first written, but came across it recently and just had to pass it along. He cites to the work of two economists, Emmanuel Saez, and Nobel laureate economist Peter Diamond, who prove that we should be taxing the rich at a 70% rate:
It is an arresting assertion, given the tax-cut mania that has prevailed in these societies for the past 30 years, but Diamond and Saez’s logic is clear. The superrich command and control so many resources that they are effectively satiated: increasing or decreasing how much wealth they have has no effect on their happiness. So, no matter how large a weight we place on their happiness relative to the happiness of others – whether we regard them as praiseworthy captains of industry who merit their high positions, or as parasitic thieves – we simply cannot do anything to affect it by raising or lowering their tax rates.
The unavoidable implication of this argument is that when we calculate what the tax rate for the superrich will be, we should not consider the effect of changing their tax rate on their happiness, for we know that it is zero. Rather, the key question must be the effect of changing their tax rate on the well-being of the rest of us.
From this simple chain of logic follows the conclusion that we have a moral obligation to tax our superrich at the peak of the Laffer Curve: to tax them so heavily that we raise the most possible money from them – to the point beyond which their diversion of energy and enterprise into tax avoidance and sheltering would mean that any extra taxes would not raise but reduce revenue.
I’ve been advocating such taxes as a quick and easy solution to a lot of our problems, including the central problem of income inequality and, now, the allied problem of a rising oligarchy, so I just had to pass this along, if only to prove that I have respectable company. DeLong’s full post is worth reading, as it provides some insight into why we don’t do the obvious and tax the bastards. Something to do with the fact that in our fantasies, we’d like to be one of the bastards.