Occupational Licensing Across Countries

By Jeffrey Miron. 

"The standard argument for occupational licensing is that it keeps out low-quality providers. Existing evidence, however, does not support this claim; moreover,

licensing erects barriers that can restrict labor supply and worker mobility, with potentially far-reaching implications for wages, employment opportunities, and economic efficiency.

Indeed, new research suggests that

[c]ountries with higher licensing rates tend to have lower output per person, larger informal sectors, and lower scores on multiple dimensions of governance quality, including regulatory quality, rule of law, political stability, and control of corruption.

Licensing is not only a problem in advanced economies. Instead,

it appears to be a widespread labor market institution spanning countries with diverse legal systems, income levels, and regulatory traditions. […] Countries with lower income levels, weaker governance institutions, or larger informal sectors may adopt additional licensing requirements in an effort to improve quality, increase compliance, or formalize economic activity.

The research concludes that

[c]ountries with higher rates of occupational licensing tend to have lower output per person, larger informal sectors, and lower scores on multiple dimensions of governance quality."

No, Marijuana Legalization Didn't Fill Emergency Rooms With Stoned Drivers

By Aaron Brown. He teaches statistics at New York University and at the University of California at San Diego. Excerpts:

"Last October, The Wall Street Journal published an editorial titled "More Marijuana Users Are Crash Dummies."

"How much social and public-health damage will Americans suffer before doing a U-turn on marijuana promotion?" the editorial begins. "A new study finds that more than 40% of drivers who died in car accidents in one U.S. county over the last six years had elevated levels of the drug in their blood.

The "new study" they cited is available only as an abstract and a short press release describing a conference presentation of an unpublished report, with no supporting details. After the Journal editorial appeared, we made several attempts to speak with the lead author, Wright State University professor of surgery Akpofure P. Ekeh, to obtain a copy of the draft study and answer some basic questions. We were unable to reach him. A public information officer at the American College of Surgeons, where Ekeh is a member, told us via email that the study "is a research-in-progress, meaning there is not yet a complete study that I am able to provide.""

"The claim that 40 percent of deceased drivers had elevated levels of marijuana in their blood isn't trustworthy because THC testing is only ordered in some cases, presumably the ones when driver impairment is suspected." 

"Drivers were likely tested because they were suspected of intoxication."

"Also, testing the blood of autopsied drivers doesn't mean they were high while driving. THC in the blood generally indicates that someone has used marijuana in the previous few days. Postmortem THC tests are particularly unreliable."

Another study from the Insurance Institute for Highway Safety did claim to show a difference between pre- and post-legalization of marijuana use by drivers by examining changes in accident rates in five Western states. It found that legalization was associated with a 2.3 percent increase in fatal crash rates.

Here's how the authors presented the data.

 

The blue dots represent seasonally adjusted monthly motor-vehicle fatalities before legalization, the orange dots represent those after legalization, and the dashed lines show the averages before and after legalization.

The three-year average traffic death rate in legalization states was 9.5 percent higher after legalization than before. The pattern was the same in the control states that did not legalize, but they had only a 6.5 percent increase. After some complex adjustments, the authors attributed a 2.3 percent increase to legalization. It looks like a big jump. But that's because the chart presented the data in a misleading way.

I recharted the data and, unlike the authors, I made it into a time series, accounting for changes in the rate of traffic deaths during the study period. This way, you can see the trends, which undercut the authors' thesis.

The blue dots represent seasonally adjusted monthly motor-vehicle fatalities before legalization, the orange dots represent those after legalization, and the dashed lines show the averages before and after legalization.

The three-year average traffic death rate in legalization states was 9.5 percent higher after legalization than before. The pattern was the same in the control states that did not legalize, but they had only a 6.5 percent increase. After some complex adjustments, the authors attributed a 2.3 percent increase to legalization. It looks like a big jump. But that's because the chart presented the data in a misleading way.

I recharted the data and, unlike the authors, I made it into a time series, accounting for changes in the rate of traffic deaths during the study period. This way, you can see the trends, which undercut the authors' thesis.

 

The press release also had no mention of a control, so we have no idea if the drivers' THC-positive rate is higher or lower than for the general population. Scientific studies require a control. It also looked at one county in Ohio, covering data before and after marijuana was legalized there in 2023, and there was no significant change in the ratio of drivers with THC in their blood.

So the study, if it ever does appear, will have nothing to say on the impact of marijuana legalization on driving while high, and it won't present evidence that this practice is on the rise. That didn't stop The Wall Street Journal in its coverage of this yet-to-materialize study from claiming in its subhead that "high-on-pot drivers are contributing to more highway accident deaths."

The most explosive finding about the dangers of legal weed comes from a study by a team of Canadian researchers, who looked at emergency room records in Ontario before and after legalization took effect in October 2018. As CNN summarized it, the study found that "documented marijuana-related traffic accidents that required treatment in an emergency room rose 475% between 2010 and 2021."

Why is the 475 percent claim misleading? For starters, the news coverage didn't mention that we're talking about a very small number of people. During the period when marijuana was legalized and commercialized, 120,569 people showed up in Ontario emergency rooms due to traffic accidents. Just 125 people, or 0.1 percent of the total, "had documented cannabis involvement," according to the clinical judgment of the onsite medical team. Moreover, for every cannabis involvement patient, there were 18 with alcohol impairment. Of the people with cannabis involvement, 42 percent also had alcohol involvement. Cannabis alone does not seem to be the major intoxicant choice to impair driving. 

The tally of 125 people over 20 months works out to about six people per month. Before legalization, there were two people per month showing up at emergency rooms with "cannabis involvement." That's a 200 percent increase, not a 475 percent increase. Why did the authors claim a 475 percent increase? 

Marijuana legalization overlapped with the COVID-19 lockdowns. During the pandemic, people were driving much less, leading to a decline in total car accidents.

The authors wanted to adjust for this unusual situation, so they assumed that if people had been driving normally, there would have been many more marijuana-related accidents. That assumption, along with a few other adjustments, led them to raise the 200 percent increase to 475 percent.

This adjustment isn't valid. You can't compare COVID lockdown data with pre-COVID data because life was so abnormal. School closures in Ontario meant people were driving their kids to school less often, and many were working from home or were unemployed. Since most people who drive while high are less likely to do so while heading to work or taking their kids to school, you would expect an increase in the proportion of drivers on the road with marijuana in their system during the lockdowns, even if the absolute number stayed the same.

Another problem is that the 125 people counted by the researchers weren't necessarily high while driving. Just because they were classified as cannabis users in the E.R. doesn't mean they were under the influence at the time of the accident, or that marijuana caused them to crash their cars.

Some of those 125 people were passengers rather than drivers, which makes the inference that marijuana contributed to the crashes even more dubious. If someone who didn't use marijuana was giving a ride to a friend because he was too stoned to drive, and they still got into an accident, the passenger would have been counted as a patient with "documented cannabis involvement." That tells us nothing about whether marijuana legalization led to more traffic accidents.

Another problem with the dataset is that many of the people were counted because they admitted to the doctor at the E.R. that they were marijuana users. Patients would have been more willing to admit to their drug habit after legalization than before, which further biased the data.

by claims that legalization increases traffic accidents by 2.3 percent. Even if there were solid evidence for that claim, it's laughably inadequate to support a drug war." 

A Tale of Two Borders: Ceuta and Gibraltar

Why did removing border fences in Gibraltar spark no migration crisis, while Ceuta's fortified perimeter failed?

By Daniel Sánchez-Piñol of The Independent Institute.. 

"Just days after Spain celebrated winning the FIFA World Cup, it found itself making international headlines for a very different reason. Tens of thousands of migrants crossed from Morocco into Ceuta—Spain’s small autonomous enclave on the North African coast—overwhelming local resources and sparking an immediate crisis.

The political reaction was immediate. Criticism focused almost exclusively on Spain’s failure to secure its border. Because many migrants had bypassed the perimeter by swimming around it, Spanish officials quickly announced plans to construct new maritime barriers. To much of the international community, the lesson seemed simple: if the border had taller fences on land, better barriers at sea, updated intel, tighter controls, and tougher enforcement, the tragedy could have been prevented.

Spain took the heat. But the debate largely ignored a more fundamental question: Why are tens of thousands of Moroccans willing to risk their lives simply to leave their country?

The answer lies a few miles away, on the other side of the Mediterranean.

Only days before the Ceuta crisis, Gibraltar, the British Overseas Territory bordering southern Spain, removed physical fence barriers separating the two jurisdictions. There was no migration crisis. No sudden wave of Spaniards poured into Gibraltar, nor did Gibraltarians rush into Spain. Daily life continued uninterrupted; crossing the border simply became faster and easier.

Why did one border descend into chaos while the other barely made news?

The answer lies in institutional convergence.

In the mid-twentieth century, Spain and Morocco were not dramatically different. Authoritarian regimes governed both and relied on protectionist policies, running economies that rewarded political connections over entrepreneurship. In the early 1950s, Spain’s income per person was roughly twice Morocco’s—a modest gap by modern standards.

Today, Spain’s GDP per capita is roughly four times higher than Morocco’s. Meanwhile, the economic gap between Spain and Gibraltar has narrowed dramatically. That divergence explains why one border facilitates routine commerce while the other attracts desperate migration.

Spain’s transformation was no accident. Its 180-degree pivot began when the United States and the broader Western alliance sought to integrate the nation into a liberal democratic order. Following the 1953 Pact of Madrid, international isolation began to end. Spain joined the United Nations in 1955, and the 1959 Stabilization Plan abandoned decades of autarky in favor of fiscal discipline, trade liberalization, foreign investment, and market competition. Following Franco’s death, the democratic transition and subsequent integration into the European Economic Community anchored Spain’s rule of law, curtailed rent-seeking, and solidified its market economy.

Morocco has undertaken economic and political reforms of its own, but structural barriers to opportunity persist. Centralized power, militarized state, corruption, and cronyism continue to constrain entrepreneurship and job creation. These institutional weaknesses help explain why so many Moroccans look abroad for a future.

The contrast offers a powerful lesson. Paradoxically, the most effective long-term policy against irregular migration is not an impenetrable wall, but the expansion of institutions that generate opportunity: secure property rights, competitive markets, and the rule of law.

That was once a central objective of Western policy. During the Cold War, the United States and Western Europe invested considerable diplomatic, economic, and political capital in helping nations like Spain converge toward liberal market democracies. Today, that vision has largely been set aside in favor of a narrower focus on controlling borders.

But borders do not exist in isolation. What matters is what lies on either side of them. When institutional and economic gaps are wide, migration pressures grow, and borders become harder to enforce. When those gaps narrow, borders become easier to secure because fewer people have reason to cross them illegally.

The West cannot fence its way out of a problem by treating symptoms instead of causes. Ceuta and Gibraltar show that the most important border is still the institutional one."

Friedman’s economic model has worked everywhere it has been tried. The idea that this history of consistent success is now outdated is at odds with both history and logic

See Milton Friedman Lives! by Michael Munger. Excerpts:

"I think it is fair to divide the current anti-Friedman wave into three elements with one recurrent element. 

Laissez-faire Is Obsolete 

Vice President J.D. Vance and the broader national-conservative or “new right” movement voiced by Oren Cass (both Vance and Cass, by the way, have the same economics qualifications as Robert Reich) say that the idea of self-organizing commerce is “old-fashioned” and needs to be consigned to the scrap heap of history. In a , Vance argued that the Republican Party’s economic center of gravity has shifted “from Milton Friedman to Alexander Hamilton.” What he meant was that the “new” economic policy should predate the development of economic theory. The shift from laissez-faire toward economic nationalism, tariffs, and state-assisted industrial policy is far from new; it is, in fact, exactly the outdated mercantilist view that Adam Smith demolished in Wealth of Nations."  

Business Profits 

In 1970, Friedman published a now-famous The core claim was simply that shareholders’ goals are diverse and possibly contradictory. No single management strategy focused on social goals could possibly optimize that set of objectives. Consequently, the most responsible thing for business to do would be to pursue profit, honestly and within the law, and then let shareholders do with those profits as they will.  

Bizarre distortions and outright misrepresentations of this simple argument have recently bubbled up from some deep, noisome pit. Examples include a November 2025 SAPIR Journal piece, “What Milton Friedman Got Wrong,” and constant refrains of scorn from such commenters as Nobel laureate Joseph Stiglitz to Salesforce C.E.O. Marc Benioff. Bizarrely, the Stigler Center, named after Friedman’s friend and intellectual supporter George Stigler, published an entirely incoherent set of comments in “.” 

They blame Friedman’s essay for launching “shareholder primacy,” which is the doctrine that a corporation’s only social responsibility is profit maximization for shareholders, full stop. Critics argue this legitimized decades of short-termism, hostile takeovers, junk-bond financing, and disregard for employees, communities, and the environment. But this whole argument misreads (or I suspect, never read) the 1970 essay. Friedman never used the terms “shareholder value” or “shareholder primacy,” and he never implies that ethical constraints should be suspended. What he does claim is that managers should not impose their own ethical goals, which is a different proposition entirely. The shareholder-first ethos of the 1980s–90s arose instead from hostile-takeover pressure and executive stock-based compensation, not from Friedman’s essay itself.  

Globalization and Deindustrialization 

A cross-ideological populist coalition, ranging from economic-nationalist conservatives to progressive never-traders, draws (loosely) on academic work from labor economists David Autor, David Dorn, and Gordon Hanson (). It is true that Friedman was among the most prominent 20th-century advocates of unilateral free trade grounded in comparative advantage. Critics argue that the trade liberalization his ideas underwrote, especially normalizing trade with China (“permanent” normal trade relations in 2000, World Trade Organization membership from 2001), destroyed roughly 2.4 million U.S. manufacturing jobs between 1999 and 2011. The ripple effects contributed to the social and economic decline of manufacturing communities and fed today’s populism on both left and right.  

To be honest, this is less a critique of a specific Friedman idea than an indictment of the free-trade consensus he symbolized. In the podcast series I did last summer and fall on the , I found it striking that the arguments that Smith considered, took apart, and corrected in his industrial policy and trade discussion are so resilient. But there is something different this time: the relationship among nations no longer satisfies liberalism’s (potentially) optimistic premises. If we are not at or considering war with another country, the argument for free trade is straightforwardly unilateral. But as , if one nation operates under liberal assumptions but another nation is trying to maximize relative gains for purposes of military dominance, then another world view may be necessary. 

It is wrong to believe that Friedman did not understand that. Blaming Friedman for China is like blaming . Like Adam Smith, Friedman was analyzing a situation where people were trading for commercial reasons, and as equals. It is anachronistic to believe that Friedman, a thorough-going empirical realist, would not have recognized China’s profound exceptionalism.  

The Recurring Refrain: Consorting with Dictators 

In March 1975, Friedman spent two weeks in Chile; he met with dictator Augusto Pinochet exactly once, for forty-five minutes. Pinochet said little but asked Friedman to put his recommendations in writing. They had met at 5:30 p.m., the end of a long day, so it’s not surprising that Pinochet would ask such a thing.  

Friedman did so about a month later, in an eight-point letter recommending sharp cuts to money-supply growth, spending cuts, and trade liberalization. It was the same style of advice he gave to many other governments. In fact, it was the exact same advice he gave on other trips at about the same time to the governments of Taiwan, Israel, Japan, West Germany, the U.K., Iceland, Estonia, about twenty other nations, and, importantly, China.  

The Chile visit was a few weeks in 1975; the China engagement was deeper and longer, including two extended trips (1980, 1988) and a personal two-hour meeting with Zhao Ziyang in the Great Hall of the People. Yet “Friedman and Pinochet” is a stock phrase, while “Friedman and Zhao Ziyang” is not really a thing.  

One must ask, though: which was the more authoritarian, murderous, repressive regime? If China was your answer, you are correct. Friedman was an enthusiastic proponent of the market order and honestly believed that it was better to live in a prosperous dictatorship than in a poor one. If either China’s or Chile’s dictators had asked about political freedom, Friedman would have advocated for individual rights and liberty. But that subject was not on the table. Instead, Friedman advised the Chinese, exactly as he had all the other nations he visited, on how to open their economy and increase commercial activity.  

There is one more twist worth mentioning on this final point. It is true that because Chile adopted the recommendations of “los Chicagos,” especially Arnold Harberger, it became by far South America’s wealthiest large economy. They have universal health care and a pension system that provides a more robust social safety net than any of their neighbors, and the comparison is not close. That is because they immediately adopted Friedman’s recommendations for reforming their economy. 

But China has also become wealthy. The open market resulted in an enormous increase in China’s prosperity. That is because China adopted, though belatedly, Friedman’s economic reform recommendations. 

Friedman’s economic model has worked everywhere it has been tried. The idea that this history of consistent success is now outdated is at odds with both history and logic." 

The self-defeating trade policy affecting memory chips

By DJ Hatch of CEI. Excerpt:

"Federal policy from the Biden administration’s CHIPS and Science Act to the current Trump administration’s trade policy demonstrates an overarching desire to reshore American semiconductor manufacturing. Putting aside any merits this form of industrial policy may have, successive presidential administrations have made clear their intentions to build upon and expand the productive and manufacturing capabilities of the US semiconductor industry. Unfortunately, the current administration’s trade policy undermines this goal.

Much of the relevant tariff regime relies on Section 232 of the Trade Expansion Act of 1962, which authorizes the Commerce Department to investigate whether imports of a given product threaten national security and empowers the president to impose tariffs in response. Crucially, Section 232 is an ongoing statutory authority rather than a one-time policy. The Trump administration has invoked it in separate proceedings covering different products, each with its own investigation and tariff schedule. Two of those proceedings have implications for American memory chip production, with one targeting semiconductors and the other targeting metals (such as steel, aluminum, and copper).

The rationale behind the semiconductor proclamation is what makes the tariffs on metals difficult to reconcile. The Commerce Department found that the United States manufactures only about 10 percent of the chips it needs and treated that dependence on foreign supply as a national security risk (the very risk reshoring is meant to address). Yet the same Section 232 authority, invoked against steel, aluminum, and copper, raises the cost of the domestic production that the semiconductor finding says the country needs.

Semiconductor fabrication plants (“fabs”) are particularly metal-intensive industrial structures, built with heavy steel frames, extensive copper wiring, and large cooling systems. Micron, the only major American manufacturer of memory chips, reports that its Idaho fab has a structural backbone framed with some 70,000 tons of steel. The recent Section 232 metals tariff raises the cost of that material across the board. As of April, those tariffs bite harder as the duties are now assessed on the full customs value of covered steel, aluminum, and copper articles and their derivatives, rather than only the value of the metal content. Thus, the tariff falls on fabricated components and finished structural inputs, not just raw metal. Even when sourcing domestic material, fab developers face inflated prices. Micron is building new DRAM fabs in Idaho and New York under precisely these conditions. If the goal is to expand domestic memory chip production, taxing the plants that produce those chips is counterproductive.

The tariff regime itself all but acknowledges the problem. The same proclamation carves out metal-intensive industrial and electrical-grid equipment, capping the combined duty on those goods at 15 percent through the end of 2027, well below the 50 and 25 percent rates that fall on other covered goods. It is hard to explain the existence of a special, lower tier for exactly the equipment a domestic buildout requires as anything other than a tacit admission that these tariffs raise the cost of building American industrial capacity.

Both the Biden and Trump administrations have made reshoring American chip production a national priority. But current trade policy runs counter to that goal. It raises the cost of building the fabs that reshoring requires, under the same statutory authority invoked to protect the industry (a contradiction the administration effectively concedes by capping the tariff on the equipment those fabs need). By taxing the construction needed to expand domestic memory chip production, this tariff regime delays the very supply increases needed to ease the shortage."

Don Boudreaux vs. Peter Navarro on transshipments

See Peter Navarro Is to Economics What Trofim Lysenko Is to Genetics by Don Boudreaux.

"This letter was sent ten days ago to the New York Times; it was not published there.

Editor:

Trump administration trade official Peter Navarro’s attempt to justify the White House’s crackdown on transshipments fails on several counts (“It Was a Great Scam While It Lasted,” August 13). First, these transshipments are the inevitable result of a trade regime – such as Trump’s – that, by rejecting the largely uniform tariffs that arise under a policy of most-favored-nation status, imposes wildly different tariff rates across different countries.

Second, while Navarro is correct that transshipping reduces U.S. customs revenues, he neglects to mention that these revenues are paid overwhelmingly by Americans. His complaint about transshipping, therefore, is really a complaint that transshippers are successfully easing Americans’ tax burden.

Third, Navarro is also correct – trivially so – that all motors, pumps, and other goods that Americans import are goods that Americans don’t produce. Yet he’s incorrect to imply that this reality indicts U.S. trade. Trade of course allows us Americans to acquire these goods at costs lower than we’d incur were we to produce these goods ourselves. But by releasing resources in the U.S. from the production of the goods that we import, trade also allows us to produce other goods that, were we to import less, we’d be unable to produce. Like all protectionists, Navarro is utterly blind to the production and jobs that are made possible in the domestic economy only by trade."

Taxing the Rich Can’t Close the Federal Deficit

By Adam N. Michel of Cato. 

"It’s not just the Democratic Socialists who believe in “taxing the hell out of millionaires.” The belief that Washington can finance itself by taxing a relatively small group of wealthy Americans has become increasingly mainstream and bipartisan. 

Senators Elizabeth Warren (D‑MA) and Bernie Moreno (R‑OH) propose removing the Social Security payroll tax cap, subjecting earnings above $184,500 to the 12.4 percent combined employer-employee payroll tax. Senators Chris Van Hollen (D‑MD) and Cory Booker (D‑NJ) each propose exempting more wages from income taxes at the bottom while raising taxes on higher earners. President Trump has pursued a similar strategy of expanding tax exemptions, while President Joe Biden and Vice President Kamala Harris both pledged not to raise taxes on anyone earning less than $400,000.

Each approach shifts more of the tax burden toward the top. One problem with this approach is that there are not enough high-income Americans to finance the current federal budget deficit, let alone fund additional spending or tax cuts. 

One simple way to illustrate the mathematical impossibility of raising taxes only on rich people is to ask an intentionally extreme question: How much income is actually left to tax at the top? Not as much as popular proposals usually assume. 

Using IRS data, the post below shows an upper bound for income-tax increases on high earners. In 2023, if the government had confiscated every dollar earned over half a million dollars, it still would have run a budget deficit. 

What’s left to tax?

Using IRS data from the 2023 tax year (the most recent available), we can illustrate the difficulty of raising a lot more revenue from a narrow segment of the population.

In 2023, taxpayers filed 161 million individual income tax returns, reporting $15.3 trillion in adjusted gross income (AGI). AGI includes wages, capital gains, personal business income, and other forms of income, minus adjustments for things like student loan interest and retirement contributions. 

The IRS reports this information by different income groups, separating taxpayers into buckets with AGIs above and below $200,000, $500,000, $1 million, and $10 million, among others. Table 1 shows the total AGI and income taxes paid, including federal taxes and an estimate of state-level taxes, by each group. 

 

In 2023, taxpayers earning over $1 million reported $2.5 trillion in total AGI and paid $747 billion in federal and state income taxes. To estimate state income taxes, we apply average rates by income group from the Institute on Taxation and Economic Policy. The 799,094 tax returns in the $1 million+ group accounted for 0.5 percent of all returns and paid an average federal and state income tax rate of 29.5 percent.

In theory, Congress could devise a way to reach every dollar of untaxed millionaire income. But most proposals to raise taxes on high earners instead start by increasing marginal tax rates. Under a graduated income tax, a higher rate imposed above $1 million applies only to income exceeding that threshold, which exempts the taxpayer’s first $1 million from additional taxes.

The IRS data show that for the $1‑million-and-above group, there is $1.7 trillion in AGI above the threshold. Applying the group’s average tax rate implies they have already paid roughly $512 billion in taxes on their above-threshold income. That leaves $1.2 trillion after taxes. 

If Congress confiscated every one of the remaining $1.2 trillion after-tax dollars earned above $1 million, the resulting revenue would have fallen nearly $600 billion short of covering the cost of the 2023 $1.8 trillion calendar-year deficit. Dropping the taxable income threshold to $500,000 would also have fallen just short of covering the same year’s deficit. And these estimates make the wildly unrealistic assumption that a 100 percent marginal tax rate would have no behavioral or other economic effects. 

Figure 1 extends the improbable assumption over 10 years, assuming that high-income Americans would continue to earn income when facing 100 percent income tax rates. It adjusts the 2023 data by projected income and household growth to show untaxed income over the next 10 years. Confiscating all income earned over $1 million would cover only about 80 percent of the Congressional Budget Office’s (CBO) projected $24.4 trillion federal deficit over the same period. 

 

The Committee for a Responsible Federal Budget produces a more realistic projection of future deficits that assumes Congress extends many expiring tax and spending programs (which the CBO is required to assume are not renewed). At the more likely deficit figure of $29.4 trillion, even lowering the income threshold to $500,000 does not cover the next decade’s budget shortfall.

Lowering the taxable income threshold further to $200,000 expands the pool of untaxed income, but it does not make confiscatory tax rates economically plausible. 

Common sense and economic incentives make clear that Congress cannot raise marginal income tax rates anywhere close to 100 percent and expect taxpayers to continue earning and reporting the same income. A recent report by economists at the Joint Committee on Taxation estimates that combined state and federal income tax rates are already near their revenue-maximizing level. Raising top income tax rates further would result in revenue gains of about 0.1 percent of GDP, equivalent to at most $400 billion over the next decade. 

Conclusion 

Taxing incomes at 100 percent marginal rates is not a realistic policy proposal. Taxes significantly higher than what we have today would radically change how much people work, invest, and realize as income, as well as how much income they report to the government. The point of this exercise is to show that “just tax the rich” proposals fail, even under arithmetic that is the most favorable possible."