Is the Maximum Tax on Earned Income Effective?

Lawrence B. Lindsey

No 613, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The Tax Reform Act of 1969 included a provision intended to set at 50 percent the tax rate on all personal service income above the 50 percent bracket amount. The current law fails to meet this objective for the vast majority of these taxpayers. This paper explains why the current law is ineffective, simulates our current experience with the law using the National Bureau of Economic Research TAXSIM model, and considers options to the present law.

Date: 1981-01
Note: PE
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Citations: View citations in EconPapers (12)

Published as NTJ, Vol. 34, no. 2 (1981): 249-256.

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