Taxing the Rich

One important lesson we learn in economics is that the government’s projected tax revenue differs from actual tax revenue received. To summarize (begin by picturing a Supply and Demand curve in your heads):

1. Any projected tax revenue takes into account the quantity before the tax is placed.
2. Placing the tax on any product will shift the supply curve to the left.
3. Identify the new equilibrium quantity and you will find it has decreased.
4. Find the new tax revenue (quantity times the tax) and it will be smaller than the pre tax revenue.

Here is some evidence of taxing high end labor. Is this a viable and desirable alternative?

Update: For a different perspective regarding taxing the wealthy here is an interesting article by a well known economist.