Question
Suppose I claim that a small tax increase on upper income individuals (from a 37% to 40% marginal rate for people with income over $500.000)
Suppose I claim that a small tax increase on upper income individuals (from a 37% to 40% marginal rate for people with income over $500.000) will raise $200 billion of federal government revenue over the next decade. Assume the change will reduce work incentives, but we are not sure how much, so that GDP and income end up being lower and government revenue is impacted by both the rate and the decline of incomes earned in that range. Make a short (approximately more word) essay about how you would try to figure out the size of the impact on how much people work and the resulting level of income and total revenue from income taxes. Discuss what data and evidence you might use tolsee if my claim is accurate. Mention potential design of a research survey to get an accurate guess about how high income individuals might respond. Put aside the question of your personal feelings about whether such tax rates are ethical (or not) and focus on the problem of how to get an objective forecast of the impacts on revenue
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