Conservatives love to talk about the “Laffer curve,” which says that above a certain optimal tax rate, tax collections actually decrease as rates go up. At a certain point, taxpayers start to change their behaviors to avoid taxes, thus decreasing revenues. So what is the optimal tax rate for top earners? A new study says it’s a whopping 76 percent:

If you assume a broad base and no deductions, [Peter] Diamond and [Emmanuel] Saez peg the revenue maximizing rate for top earners at 76%. That’s for federal income tax only. (See p. 173 here.)

Paul Krugman explains that the study debunks two major conservative myths about raising taxes on the rich:

• It will not cause the rich to stop working or investing.
• It will not kill jobs or hurt the economy.

In fact, the study finds that increasing taxes all the way up to 76 percent would little impact on the behavior of the super-rich.

I’m not necessarily saying that the tax rate on the super-rich should go all the way up to 76 percent. But clearly it should be higher than it is. The fact is, our currently system is failing us miserably. Allowing the rich to gain at the expense of the bottom 99 percent is destroying the economy for everyone. With a more progressive tax system, the rich would still be doing better than ever, and the rest of us might even have a chance.