Why Tax the Rich
the AVI-YONAHFINAL.DOC
FEBRUARY 26, 2002 2/26/02 5:38 PM
Book Review
Why Tax the Rich? Efficiency, Equity, and Progressive Taxation
Reuven S. Avi-Yonah†
Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Edited by Joel B. Slemrod.∗ Cambridge: Harvard University Press, 2000. Pp. 524. $57.95. In Greek mythology, Atlas was a giant who carried the world on his shoulders. In Ayn Rand’s 1957 novel Atlas Shrugged, Atlas represents the “ prime movers” —the talented few who bear the weight of the world’s economy.1 In the novel, the prime movers go on strike against the oppressive burden of excessive regulation and taxation, leaving the world in disarray and demonstrating how indispensable they are to the rest of us (the “ second handers” ). Rand wrote in a world in which the top marginal federal income tax rate in the United States was 91% (beginning at taxable income of $400,000).2 This is an unimaginably high rate by today’s standards, when the dominant view in Washington is that a marginal rate of 39.6% (the top
† Irwin I. Cohn Professor of Law, University of Michigan. I would like to thank Yossi Edrey, Allen Graubard, David Hasen, Judy Herman, Don Herzog, Jim Hines, Bob Kuttner, Doron Lamm, Jeff Lehman, Kyle Logue, Dan Shaviro, Joel Slemrod, Dennis Ventry, and Larry Zelenak for their extremely helpful suggestions. All errors are mine. * Paul W. McCracken Collegiate Professor of Business Economics and Public Policy, University of Michigan. 1. AYN RAND, ATLAS SHRUGGED (1957). 2. Joel B. Slemrod, The Economics of Taxing the Rich, in DOES ATLAS SHRUG? THE ECONOMIC CONSEQUENCES OF TAXING THE RICH 3, 3 (Joel B. Slemrod ed., 2000) [hereinafter DOES ATLAS SHRUG?].
1391
AVI-YONAHFINAL.DOC
FEBRUARY 26, 2002 2/26/02 5:38 PM
1392
The Yale Law Journal
[Vol. 111: 1391
rate from 1993 to 2001) is too high.3 The key turning point in the process of abandoning high marginal tax rates occurred in the presidency of Ronald Reagan. When
FEBRUARY 26, 2002 2/26/02 5:38 PM
Book Review
Why Tax the Rich? Efficiency, Equity, and Progressive Taxation
Reuven S. Avi-Yonah†
Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Edited by Joel B. Slemrod.∗ Cambridge: Harvard University Press, 2000. Pp. 524. $57.95. In Greek mythology, Atlas was a giant who carried the world on his shoulders. In Ayn Rand’s 1957 novel Atlas Shrugged, Atlas represents the “ prime movers” —the talented few who bear the weight of the world’s economy.1 In the novel, the prime movers go on strike against the oppressive burden of excessive regulation and taxation, leaving the world in disarray and demonstrating how indispensable they are to the rest of us (the “ second handers” ). Rand wrote in a world in which the top marginal federal income tax rate in the United States was 91% (beginning at taxable income of $400,000).2 This is an unimaginably high rate by today’s standards, when the dominant view in Washington is that a marginal rate of 39.6% (the top
† Irwin I. Cohn Professor of Law, University of Michigan. I would like to thank Yossi Edrey, Allen Graubard, David Hasen, Judy Herman, Don Herzog, Jim Hines, Bob Kuttner, Doron Lamm, Jeff Lehman, Kyle Logue, Dan Shaviro, Joel Slemrod, Dennis Ventry, and Larry Zelenak for their extremely helpful suggestions. All errors are mine. * Paul W. McCracken Collegiate Professor of Business Economics and Public Policy, University of Michigan. 1. AYN RAND, ATLAS SHRUGGED (1957). 2. Joel B. Slemrod, The Economics of Taxing the Rich, in DOES ATLAS SHRUG? THE ECONOMIC CONSEQUENCES OF TAXING THE RICH 3, 3 (Joel B. Slemrod ed., 2000) [hereinafter DOES ATLAS SHRUG?].
1391
AVI-YONAHFINAL.DOC
FEBRUARY 26, 2002 2/26/02 5:38 PM
1392
The Yale Law Journal
[Vol. 111: 1391
rate from 1993 to 2001) is too high.3 The key turning point in the process of abandoning high marginal tax rates occurred in the presidency of Ronald Reagan. When