Shadi Hamid: Ocasio-Cortez understands politics better than her critics

The green-eyeshade folks aren’t fond of short, easy answers. But, to start, experts said that there was nothing unusual or even that radical about what Ocasio-Cortez has in mind. Higher rates were common throughout the 20th century, with the top marginal rate averaging 78 percent from 1930 to 1980 and climbing up to 90 percent in the late 1950s and early ’60s.

“Ocasio-Cortez has done a great public service in just saying, ‘You know, we could have higher rates,’” said Mark Mazur, an economist at the Tax Policy Center, a nonpartisan think tank based in Washington, D.C. “In the past, we have had them, and they worked. And you don’t have to go all the way to 70 percent. But right now we’re stuck with this question of whether the top rate should be 39.6 percent or 37 percent—that’s a pretty narrow range. What she’s saying is you can imagine taking them up a lot higher.”

That said, if the goal is to raise more money for redistributive policies and to ensure that millionaires pay their fair share, Ocasio-Cortez’s proposal isn’t particularly efficient. It might not even raise that much money, instead discouraging employers from paying workers more than $10 million or workers from trying to earn more than that threshold. Imagine you were a lawyer who often earned in the high millions a year; if you hit the $9 million mark in the fall, you might work somewhat less, knowing that much of what you made over $10 million would get taxed away. The tax rate would, in effect, reduce inequality in pretax incomes, as well as in posttax incomes. (It would also encourage the very rich to hide income above $10 million.)

A better way to extract money from top earners would be to get rid of the loopholes, deductions, and exemptions they use to shelter income from taxation in the first place, economists said. “Broadening the tax base is generally more efficient than changing rates,” said Kyle Pomerleau of the Tax Foundation, a think tank in Washington, D.C. “That would include getting at what I would call the Big Three, which is the charitable deduction, the home-mortgage-interest deduction, and the state- and local-tax deduction.”

Derek Thompson: Alexandria Ocasio-Cortez has the better tax argument

The charitable deduction allows very high earners to spend on nonprofit causes that they find interesting and valuable, as opposed to turning that money over to Uncle Sam for what the broad public wants and needs. (As the Trump Foundation so extravagantly shows, such charitable largesse is often anything but.) The home-mortgage-interest deduction prompts the rich to buy even fancier houses than they could otherwise afford. And the state and local deduction reduces the tax bills of rich families who happen to live in high-tax states. Together, the Big Three cost the government something like $100 billion a year.