Dec
04

Cost-Benefit Analysis

Higher taxes on the rich will reduce their incentives to work, save and invest, clipping maybe 0.5% off of GDP. But that’s not the end of the story. The relevant question is: will the benefit to society of redistributing some income from rich to poor (which will hopefully result in better trained workers, improved high-school graduation rates and higher incomes for the poor), be worth the cost of forgone GDP?

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