The Rich and the Ultrarich

Julian Sanchez has an excellent post on how the political coloration of the rich differs from that of the ultrarich. It turns out the ultrarich really do tend to vote for Democrats, and they really are less tax sensitive than the “merely” rich.

Many liberals are befuddled by “right-wing populism,” which appears (to them) to be an elaborate scam. They find it particularly puzzling that Southern white men start bristling at high taxes at incomes barely above the median. But of course this makes sense: much of the aspirational middle class sees steep marginal tax rates as a barrier to their economic advancement.

Greg Mankiw touches on a related matter in this post on redistribution.

If I were a redistributionist, here is what I might propose: A large fixed payment to every citizen, paid at the beginning of every month, financed by a proportional tax on consumption, such as a value-added tax.

My sense is that such an approach would facilitate upward mobility. But of course this is an empirical question that hasn’t come close to being settled.