What should the highest income tax bracket rate be?

[phk]

1.) Move it to Econ board.

2.) Deadweight loss is approximately taxation squared so from a deadweightloss minimization perspective it is better to have a lot of small taxes as opposed to one big tax.

[phk]

If we're going to have a progressive tax structure, I say we eliminate the bracket system and replace it with a continuous function to determine the rate. I don't think having piecewise discontinuities is a good idea and creates unnecessary distortions, especially when we could just as easily use some other kind of function.

I've always thought about doing that, but I don't know what the exact effects would be, if any.

Like an econometric formula?

[phk]

You get big deadweight loss problems with tax rates north of 40%.

It's better to have a lot of smaller taxes. VAT, Sales, SS, Income, Sin, etc than to have a single high tax.

[phk]

You get big deadweight loss problems with tax rates north of 40%.

Why is that in particular?

Because, it's kind of a mathematical identity, but deadweight loss increases at a rate of (taxation)^2.

Though I should rephrase, DWL wont occur, more likely the case you'll get evasion.