Short answer: It depends on your goals. If your priorities are reducing deficits and inequality with limited drag on growth, a well‑designed increase in effective taxes on the very highest‑income households can make sense. If your top priority is maximizing private investment and risk‑taking, large rate hikes can be counterproductive. The details matter more than the headline rate.
How to think about it
•Reasons to raise top‑end taxes
•Revenue: High‑income households hold a large share of national income and wealth, so modest increases can raise meaningful funds.
•Equity: Progressive taxes can offset rising pretax inequality and fund public goods/opportunity.
•Efficiency when well targeted: Closing avoidance channels and taxing economic rents (e.g., monopoly rents, land, location‑specific gains) can raise revenue with relatively small efficiency costs.
•Reasons for caution
•Behavioral responses: The wealthy can time income, reclassify it, or shift it abroad; poorly designed hikes may raise less than expected.
•Investment and entrepreneurship: Very high combined marginal rates can deter risk‑taking or push activity to low‑tax jurisdictions.
•Administrability: Some proposals (e.g., annual wealth taxes) are complex to value and enforce.
What “raising taxes on the wealthy” can mean (from lower‑ to higher‑risk options)
•Enforce existing law better: More IRS resources and information reporting to lift effective rates without changing statutes.
•Close base holes: Limit preferential treatment of carried interest, pass‑through loopholes, and aggressive trust strategies; curb deduction gaming.
•Capital income reforms targeted at the very top: Narrow the gap between labor rates and capital‑gains/dividend rates for ultra‑high incomes; tax large unrealized gains at death; length‑based or income‑based surcharges on gains to reduce timing games.
•Modest top‑rate or surtax increases at very high thresholds: Phase in to avoid cliff effects; coordinate with state taxes.
•Estate/gift tax tightening: Higher effective taxation of very large bequests can be more administrable than annual wealth taxes.
•Minimum effective rate rules: Ensure very‑high‑income filers pay at least a floor percentage regardless of preferences.
•Broad wealth taxes: Possible but highest administrative and avoidance risks; success hinges on strong valuation, exit, and enforcement rules.
Practical guardrails
•Focus on effective rates and the base first; rate hikes work best once avoidance channels are narrowed.
•Target the top 0.1–1% with high thresholds, gradual phase‑ins, and indexing to inflation.
•Pair changes with simplification to reduce planning games.
•Evaluate combined federal+state rates and international competitiveness.
If your goals are to cut deficits and improve after‑tax equality with manageable growth trade‑offs, a prudent package would prioritize enforcement and base‑broadening, plus modest, targeted increases on very high incomes and large capital gains and estates. If you’d like, tell me:
•US federal only, or also state/local?
•Focus on income, capital gains/dividends, wealth/estates, or a mix?
•Revenue target or programs you want to fund?