Taxing the Ten Percent

46 Pages Posted: 12 Apr 2024

Date Written: March 15, 2024

Abstract

*** This is a substantial revision of Should Only the Richest Pay More. The first part of this paper (pp 8-26) is a shorter version of the first part of Pay More (pp 7-41). The second part of this paper (pp 26-46) is new. It discusses multiple means of implementing a tax increase on the top ten percent and it critiques the optimal tax theory case for focusing only on the top one percent.***

The United States government is rapidly approaching the point when it will have no choice but to raise taxes. But whose taxes should go up, and why? The argument for higher taxes on the top one percent is well known. The case for higher taxes on the next nine percent is not. This Article makes that case.
Americans with incomes in the top ten percent but not the top one percent are not rich, but they are not middle class either—they are affluent. These affluent Americans have seen mostly tax cuts over the past three decades. Yet today, as progressive politicians and academics advance dramatic proposals for taxing the rich, higher taxes on the affluent remain beyond the pale. This is a mistake. The economic fortunes and the tax-paying capacity of the affluent have been on a steady, if unrecognized, ascent. Moreover, the affluent have entrenched their economic advantage more successfully than any other group, the top one percent included. Because this economic advantage is backed by a dominant cultural narrative and strong political muscle, the economic position of the affluent in American society is enviably secure. As the country’s fiscal situation grows increasingly dire and the gap between the well-off and the rest grows increasingly wide, it is beyond unwise to continue giving the affluent a tax pass. The top one percent should pay more in taxes; the next nine percent should as well. With proper structuring, this tax increase may be implemented by enacting a carbon tax, a value added tax, a national income tax, by reforming the payroll tax or tax expenditures, or by adjusting the rate structure.

Keywords: tax reform, one percent, inequality, redistribution

JEL Classification: K34

Suggested Citation

Raskolnikov, Alex, Taxing the Ten Percent (March 15, 2024). Columbia Law and Economics Working Paper Forthcoming, Houston Law Review, Forthcoming, Columbia Public Law Research Paper No. 4760118, Available at SSRN: https://ssrn.com/abstract=4760118

Alex Raskolnikov (Contact Author)

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

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