Political Economy Research Institute: Raising Revenue from High-Income Households
ITEP Work in Action“These anticipated reactions – changes in the timing and composition of income and other forms of tax avoidance – are not nearly as dramatic as the consequences predicted by some parties in the debate over taxes. Some, but not all, of these reactions can be expected to result in inefficiency and deadweight loss for a state’s economy. Some high-end tax increases hold the promise of being efficiency-enhancing, and the efficiency costs of some others are likely to be minimal. But the revenue to be gained by states by extending taxes on wealthy households is substantial, and these avoidance strategies have minimal impact on that bottom line. The benefits of sustaining appropriate levels of funding on K-12 and public higher education, public safety, and transportation, should be weighed against these consequences – as opposed to unsubstantiated fears that the rich will flee a state en masse or shut down their businesses.”