Capital Ideas is now Chicago Booth Review but unfortunately original articles are no longer available. If you click through you will be taken to the Internet Archive site to find an archived copy.
The responsiveness of taxpayers to changes in marginal tax rates has become perhaps the most central issue in public finance, and nowhere is the debate more heated than at the very high end of the income distribution. Yet it seems there is little direct evidence on the rich and their money. Data used to study tax responsiveness of the rich – based on actual tax returns and limited government data – has suffered from serious flaws which make analysis difficult. Now, by compiling one of the most comprehensive data sets ever gathered on the rich, assistant professor of economics Austan Goolsbee at the University of Chicago Graduate School of Business has uncovered striking evidence that challenges conventional wisdom on how the rich respond to taxation.
Editor’s Note: this was written in 1998 and deals with the effects of Clinton tax policies in the U.S. – it would be interesting to see updated studies of this nature on Bush’s tax cuts as well as international tax policy effects…
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