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This research examines the impact of the maximum tax on promoting horizontal equity and its motivational effects for taxpayers.

The Equity and Motivating Effects of the Maximum Tax.

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Randomized trial analyzes maximum tax effects on equity and motivation in high-income earners, highlighting implications for tax policy.

This research examines the impact of the maximum tax on promoting horizontal equity and its motivational effects for taxpayers.
Analysis of tax return data from the 1976 Individual Tax Model file.
Simulated results for the years 1975, 1977, and 1979 regarding maximum tax changes.
Comparison of tax sheltering activities among maximum tax beneficiaries and other taxpayers in the same AGI class.
The maximum tax contributed to horizontal equity, notably for taxpayers with AGI over $100,000.
This contribution to equity persisted throughout the eleven years it was in effect.
Maximum tax beneficiaries were less likely to engage in tax sheltering than their peers in similar income brackets.

Madeo et al. (1984) studied this question.

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