Raising Revenue From High-Income Households: Should States Continue to Place the Lowest Tax Rates on Those with the Highest Incomes?

Abstract

In recent years, some states have responded to the collapse in tax revenue following the Great Recession by turning to tax increases targeted at high-income households. The revenue from such taxes can help sustain public spending on vital public services. Jeffrey Thompson looks at decades of evidence and clearly finds that such income taxes effectively raise substantial revenue, without risk of harm to the state’s economy. He argues that wealthy households have reaped vast benefits from state and federal tax codes for decades now, and to look to them now for much-needed revenue is sound policy.