A government proposal to increase marginal tax rates on the wealthiest 2 percent of U.S. residents is supposed to generate an additional $100 billion in tax revenues. It is likely that

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The proposal to increase marginal tax rates on the wealthiest 2 percent of U.S. residents is likely to reduce their incentive to work and earn more income that can be taxed. As a result, some of them may choose to work less or find ways to avoid paying higher taxes, which will reduce the actual revenue raised. While it's possible that some of the 98 percent population may increase their work effort with a more fair tax system, it's difficult to predict how much of an impact this would have. The short-run aggregate supply curve being upward sloping doesn't necessarily mean that the actual revenue raised will be more than $100 billion, as it depends on how people respond to the tax changes. The idea that the wealthy don't respond to work incentives the way poorer workers do is a questionable assumption, and it's likely that some degree of behavioral response will occur among all income groups.

A Government Proposal to Increase Marginal Tax Rates on the Wealthiest