GV4D4 week 10

• the progressive income tax as the major fiscal innovation of the 20th century
• types of taxes:
• capital flow, or capital stock (real estate etc)
• (non-capital) income tax
• consumption tax (indirect since it's not on income)
• social insurance contributions
• today, many tax systems are regressive on top (even worse when you consider that wealth is taxed less than income)
• suggests that a progressive tax is necessary to shield those who lose out from globalisation (otherwise they'll turn against it)
• (unfortunately it's now too late)
• most advanced countries had developed some sort of progressive tax systems before WWI, though top incomes were still taxed at very low rates (skyrocketed during the war)
• mostly falling after the 80s though
• suggests that very high tax brackets (70%) aren't actually primarily intended to raise further revenue
• rather, it's to put an end to such extreme concentrations, albeit in a liberal-approved way (not direct expropriation)
• concurs that decreasing these top tax rates doesn't actually lead to increased revenue (pace the Laffer curve)
  • in the UK/US, didn't stimulate productivity; instead, incentivised top execs and others with some degree of control over salaries to get paid more
• proposes that optimal top tax rate in advanced countries is >80% (better redistribution without limiting growth)
  • easier to implement this in a large country like the US rather than a small, European one (less chance of flight)