Higher Tax Rates May Cause The Top 1% To Work Harder

I posted a critique of Alan Meltzer's recent article in the WSJ that suggested that growing income inequality in the US did not require any political response because it was a global problem and not unique to policies in the US. This article explains why Meltzer's claim leads to a conclusion that he and his fellow conservatives will not like. If one accepts the claim that income inequality is rising even in country's with very high tax tax rates, it is devastating to the conservative argument that high taxes will cause those with high incomes to reduce their efforts which will slow down economic growth. If that were true, their incomes would not be growing fast in high tax countries. Perhaps higher tax rates will even make them to work harder. In fact, the top marginal tax rates were double our current rates when we had our our highest rates of economic growth.