In its place we can then simplify personal taxation: just treat all investment income (yes, dividends and capital gains) the same as we treat any other form of income, to be taxed at whatever is the appropriate marginal rate for the total income of the recipient.

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Using the data from 1913 through the end of 2011, the correlation between the maximum marginal income tax bracket and total Federal receipts is a negative 0.50.

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If we hold additional cash or banks hold additional cash reserves, total utility will rise, but marginal utility will likely fall.

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