Higher income tax rates are a blunt instrument applied to a problem (wealth inequality) caused by structural changes in the world economy. They will be superficially helpful but second and third order effects ought to be fully modeled and debated.
The wealthy are extremely mobile and the United States is no longer as competitive a place to live as it was post WWII. We can likely model this effect on lost tax revenue but what of what is the cost of losing an Elon Musk?
On the output side, do we trust government’s ability to spend funds 1) efficiently (without corruption) 2) without causing distortions (boom/bust cycles that worsen the problem)? Do we trust the government to invest more efficiently than @elonmusk ?
I am not a hardcore libertarian. The government can help by using tools like taxation, legislation and the FTC to systematically address externalities and the soft monopolies that have gotten us to this point.
However, some amount of wealth inequality is inevitable and even optimal—reducing it should not be a goal in and of itself. We should be striving to make our economy fairer and more competitive. Do that and the score will take care of itself.
