John Carney — What Happens if You Tax Savings?

There’s certainly some point at which my desire to save could be overcome with taxation. If you taxed my savings at 100 percent, I’d stop doing it. But I imagine the savings tax rate could go well above 50 percent before it totally overcame the desire to save more against the higher tax rate.

Read it at CNBC NetNet

What Happens if You Tax Savings?
by John Carney

The curve of increasing marginal tax rate shows increasing ineffectiveness of increasing the marginal tax rate until ~32%. Then the effectiveness of rising marginal tax rate increases as the wealthy save less and consume and invest more. There is ample empirical evidence showing that the US economy did just fine with high marginal tax rates. See the work of Michael Hudson on this, for instance.

See Mike Kimel at Angry Bear has several nice posts on the "Laffer Curve"