Funding the fiscal commons: does a larger share of rich citizens hasten or delay the trip to default?
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In recent decades, the US fiscal condition has been characterised by high and rising debt. On a fiscal commons in which citizen-voters attempt, through their congressional representatives, to minimise tax payments, this is the expected outcome. In this article, we examine the effects of a tax policy that has concentrated tax liability on the upper end of the income distribution in light of another important trend: rapid growth in the higher-income segment of the income distribution. We find that growth in the higher-income segment of the income distribution – more people paying higher taxes – has made the tragedy of the fiscal commons less severe and slowed the pace to a possible ultimate default.
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