The Death of the Efficiency-Equity Tradeoff?: A Commentary on McMahon's Matthew Effect and Federal Taxation

Abstract

Professor Martin J. McMahon, Jr.'s Article on the Matthew effect presents an important and timely argument about decreasing the income inequality in the United States through the federal tax system. His contention that the rich tend to get richer is widely supported by both economic and social theories. But Professor McMahon may be too sanguine about Congress's ability to increase top marginal tax rates significantly without adversely affecting economic output. In particular, concerns about the validity of the long-term studies on which he relies, and the failure to account fully for the special circumstances of very high-income taxpayers, suggest that only modest rate adjustments would be desirable.