Enrico Moretti highlights the beneficial role that the newly rich play in enhancing civic institutions in the cities where they live. Johns Hopkins University must be grateful to Michael Bloomberg. Which institutions would suffer if we adopt the 70% marginal income tax rate? Would the opera decline in quality? Would museums no longer have new exhibits? Or would donations to these institutions soar as the tax accountants think of clever deductions?
How would public universities such as UCLA fare in a new world with a more equal distribution of income and much higher marginal tax rates? Would the new middle class favor investing in research universities using its state tax dollars? Would the NSF and NIH still have impressive research budgets? Would private small donations rise enough to offset the reduction in large donations from the very rich? Would the middle class stomach higher tuition charges for their kids without the financial aid subsidies that are financed from the endowments built from past gifts from the very rich? I don't know the answers to these questions but I sense that during these angry days that the benefits of the 1% have been ignored.