When are high marginal taxes on the rich feasible?
Interesting hypothesis:
“What in the middle
of the 20th century caused tax rates to spike? They didn’t find much evidence
that stretches of inequality overlapped with these high tax rates. And they
considered that maybe tax rates went up when more-liberal politicians were in
power, but tax rates went up only slightly during those times.
Instead, the
explanation they found most plausible was that the mid-20th-century differed
from all other periods in a crucial way. “The key events we see in driving that
inverted U-shape are mass mobilization for war,” Scheve explains. When
countries (especially democratic ones) mobilized for war, questions about
fairness came to a head, because—even during nationwide drafts—it was most
often the lower and middle classes that were on the front lines. “The actual
rhetoric of the times was, if you're going to conscript labor, you need to
conscript capital,” Scheve says.”