What happens when you reduce taxes on the highest earners?

When you reduce tax on the highest earners, you are essentially giving them more money to keep. This can have a number of different effects on the economy.

For one, it can lead to increased consumption, as the high earners will have more money to spend on goods and services. This can in turn lead to more jobs and economic growth (also, higher tax receipts).

On the other hand, it could also lead to increased savings and investment, as the high earners will have more money to put into savings and investment vehicles. This could eventually lead to higher levels of economic growth as well.

There is no one answer to what happens when you reduce tax on the highest earners. It depends on a number of different factors, and it is impossible to predict exactly how it will affect the economy.

Another potential effect is that it could increase inequality, as the rich would benefit disproportionately from the tax cut.

For the inverse view, follow the link to this FAQ: What happens when you raise taxes on the highest earners?