Governments shouldn’t be worried that raising taxes on the rich will harm their economies when deciding on how to pay for COVID-19. Our new research on 18 advanced economies shows that major tax cuts for the rich over the past 50 years have pushed up inequality but have had no significant effects on economic growth or unemployment.
These findings shed new light on a debate that has long divided policymakers, with one side claiming higher taxes on the rich could raise revenue and reduce inequality, and the other arguing that low taxes on the rich are the best route to wider economic prosperity.
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