Taxing the wealthy: Diving into the rich pool

This article that talks about the consequences (both good and bad) of taxing the rich in an economy. To start with, it is interesting to know that the top 10% of earners in most developed economies contribute to about 33% of the tax revenues. In the US, however, the top bracket contributes to almost 45% of the tax revenues. The article rightly points out that the rich are "juicy targets" for tax revenues as a slight percentage increase in their taxes can boost up tax revenues by large amounts. However, it is also important to note that increased taxes can cause firms and industries to cut spending, which can in turn slow down or stagnate growth. This was evident during the 1970's and 1980's as major economies such as Britain and the USA had to cut their top marginal income tax rates by almost 50% to avoid stagnation and to counter the slowdown in economic growth. The article uses these ideas to draw a conclusion that the influence of the rich on the economy is often overestimated. Yes, their influence is palpable in the short run, but as we look into the long run, deeper reforms, fixing loopholes in the present taxation systems and broadening the tax base are bound to produce greater results -- as compared to simply altering the top marginal tax rates.