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So Radley Balko brought up on Twitter a "Challenge To Lefty Bloggers" that he published back in 2009. Some of his questions are perfectly reasonable: I think we should target NGDP in a way commesurate with 4% inflation, for example; I’m also in favor of marginal (not total or average) tax rates of ~90% under certain circumstances. Some of his questions are irrelevant (the "unfunded liability" of Social Security is a non-sequitur), confused (I think he scrambles marginal and average tax burdens), or just silly (our average tax rate is close to the median – what greater suffering dare you inflict!?).

But some of them are conceptually flawed in a way I think is interesting. Firstly, his "size-of-government" metric is hopelessly flawed. More interestingly, though, are the questions about income inequality and progressive taxation – what are the optimal levels of each? The trick here is that claiming to have a theoretic or empirical basis for an exact number is a fool’s errand. The real answer to this question is "less and more than we currently have, respectively." So let’s use a little more of the latter to alleviate some of the former, and see what happens! It doesn’t have to be radical – we could just nudge up top marginal tax rates, perhaps create a new millionare’s bracket, and use the money to expand the EITC (which I know doesn’t directly affect pre-tax income inequality on either end but just roll with me here). Will that devastate innovation? Will Atlas shrug? Meh – I doubt it. In fact, Galt’s Gulch was a rather lonely place even when top marginal tax rates in the United States were 90%+. So rather than demand anyone decare a single optimal point, let’s agree that "too few people claim too large a share of national income" and nudge it a bit and see what happens. That’s what democracy is for!


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