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Higher taxes on rich doesn't battle income inequality
Hiking the top individual tax rate wouldn't do much to battle income inequality, according to a new study from the Brookings Institution.
The paper's authors found that even increasing the top tax rate from 39.6 percent to 50 percent would have a "trivial" effect on income inequality.
William Gale, Melissa Kearney and Peter Orszag, President Obama's former budget chief, wrote the paper.
Taxpayers in the top 0.1 percent would pay more than an extra half million dollars in taxes under a 50 percent top rate, while the top 5 percent would pay at least another $6,400.
The paper's authors also said there might be good reasons for hiking the top tax rate, including raising more revenue for the government, and that lower-income households would be helped by such a spike in revenue.
But they added: "That such a sizable increase in the top income tax rate leads to a strikingly limited reduction in income inequality speaks to the limitations of this particular approach to addressing the broader challenge."