Econ Comments & Analysis
Real Clear Markets | Piketty and Krugman Admit the Laffer Curve Is Real
Liberal and conservative economists disagree sharply over the extent to which a lower marginal tax rate motivates talented workers to take the risks and suffer the consequences necessary to earn more money. The strongly held belief that higher tax rates do not create significant disincentive for risk-taking is central to the liberal argument. Imagine the shock, then, when two pillars of liberal economics-Paul Krugman and Paris School of Economics professor Thomas Piketty-conceded that a lower U.S. marginal tax rates had a profound effect on the economy precisely through its motivational effects on the most productive workers.
