In 2004, Paul Krugman, New York Times columnist and Nobel Laureate, was asked at an economics conference if he believed that a return to the 1980 top income tax rate of 70 percent was a good idea. “Oh, no!,” he replied, “Those rates are insane!”
In yesterday’s column, however, after the new Democratic superstar, Rep. Alexandria Ocasio-Cortez, called for a top rate of 70 or even 80 percent, he’s all for it. He quotes such people as Peter Diamond, another Nobel laureate, who thinks the optimal rate should be 73 percent, and Christina Romer, head of President Obama’s Council of Economic Advisors, who sets the sweet spot at 83 percent.
These numbers, one infers from Krugman although it’s unclear, are the point on the Laffer Curve where revenues would begin to decline because of the tax disincentive to earn the money in the first place. At least he admits that, at a 100 percent tax rate, people would just stay in bed.
Paul Krugman’s Political Groundhog Day
In yesterday’s column, however, after the new Democratic superstar, Rep. Alexandria Ocasio-Cortez, called for a top rate of 70 or even 80 percent, he’s all for it. He quotes such people as Peter Diamond, another Nobel laureate, who thinks the optimal rate should be 73 percent, and Christina Romer, head of President Obama’s Council of Economic Advisors, who sets the sweet spot at 83 percent.
These numbers, one infers from Krugman although it’s unclear, are the point on the Laffer Curve where revenues would begin to decline because of the tax disincentive to earn the money in the first place. At least he admits that, at a 100 percent tax rate, people would just stay in bed.
Paul Krugman’s Political Groundhog Day
