Saturday, July 28, 2012

Taxes Needn’t Discourage Philanthropy

HOW high can taxes go? In 1944, the federal personal income tax rate reached 94 percent.

You might expect that such a high rate would lead to economic disaster or class warfare — or both. But it didn’t. Despite it, people prospered back then, and at least in some respects, American society was harmonious.

World War II was raging, and perhaps because of it, people seemed to be more giving, while the government more actively encouraged altruistic acts. There are important lessons to be learned from that time.

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1 comment:

  1. Professor Shiller, I would like to hear your comments on the impact of libor manipulation. Most of the articles are talking about investors in the money market funds or similar funds being harmed.

    However, almost all investors (long oriented asset owners including equity investors) experienced lower returns due to libor manipulation. Libor is an indirect return that most asset owners experience in their equity and FI portfolios. One can easily and directly measure the impact of libor on these asset class returns by considering the pricing of futures. Would you agree?