I know that this (via College Insurrection) sounds self-evidently absurd:
Economists at the University of Pennsylvania and University of Bonn argue that the United States would be better off if well-heeled citizens paid the kind of high tax rates not seen since the Eisenhower administration.
According to a working paper by Bonn’s Fabian Kindermann and Penn’s Dirk Krueger published by the National Bureau of Economic Research, going back to the 1950s’ top marginal tax rate of 91 percent could be the elixir to cure the income inequality bug.
Krueger told the Huffington Post a rate “between 85 and 90 percent” makes everybody better off, including people in the 1 percent.
…but I have actually seen someone argue this with a straight face. I was in a bar in… Denver? Providence? The blogging conventions can blur a bit, particularly after the third beer – anyway, this guy was absolutely convinced that a business owner, when faced with a 90% tax on his profits, would voluntarily and happily decrease his profits by reinvestment in the business. I am sorry to say that I laughed in the man’s face, and told him that this hypothetical business owner would instead decrease his economic activity to the point where he would be in a more advantageous tax bracket. Oddly, I don’t recall the guy’s reaction to that*. You think that I would… oh, right, the beer.
PS: No, I’m sure that it happened. I don’t get that drunk. Shoot, now that I’m a father I never get drunk at all…
*Although I’m sure that the guy’s convinced that he beat me in that argument. One reason that I don’t get into many, actually. I’m a hack and a propagandist, not a debater.