Don't Just Assume It's Impossible to Tax the Rich
Wealthy people have lots of ways to avoid paying taxes. That doesn't mean we shouldn't even try.
That’s one way of looking at it.
Photographer: Scott Eisen/Getty ImagesFor as long as I’ve been an economics journalist (23 years, more or less), the mainstream view among economists has been that taxing capital — corporate profits, dividends, capital gains, savings and wealth in general — is:
The former argument has undeniably lost a little of its oomph in recent years. The influential papers that implied that the optimal rate of capital taxation is zero (Atkinson and Stiglitz, 1976, Judd, 1985, and Chamley, 1986) have been contradicted by new theoretical models. There is some empirical evidence that high corporate income tax rates in particular may be a drag on growth, and this was one of the main justifications for the big reductions in corporate and other business taxes contained in the Tax Cuts and Jobs Act of 2017. But the case against capital taxation is no longer quite the slam dunk that it seemed like a couple of decades ago, in part because there is so obviously not a shortage of capital at the moment.