I'm not happy with either the left or right's conventional arguments about top marginal taxes.

Let's take the right's first. They claim that high taxes disincentivize the work of the highly-skilled and in doing so reduce GDP and tax revenue. I'm not happy with this because the evidence is weak (pdf). As Thomas Piketty and colleagues have shown, the feasible top tax rate could be very high indeed.

In this context, I'm baffled by Greg Mankiw's claim that more of the rich are like Taylor Swift than Henry Potter. Let's say Alexandria Ocasio-Cortez gets her way and there is a 70% tax rate on high incomes. What would Ms Swift do? She might leave the US for a tax haven thus depriving the IRS of revenue. But she almost certainly won't give up making music - any more than George Harrison did after writing Taxman. The positive externality of her efforts (consumer surplus) will thus continue - as will that of all those rich who have intrinsic motivations. By contrast, it's quite possible as Simon says that higher taxes on men like Mr Potter will reduce negative externalities such as rent-seeking, financialization or cooking a firm's books: such men are more likely to be money-motivated and so more amenable to extrinsic incentives.

Even if I'm wrong, however, those who support Brexit must invoke an additional argument if they are to object to high taxes. Imagine a dialogue between a right-wing Brexiter and advocate to higher taxes:

Brexiter: the case for Brexit is that GDP isn't everything. It's worth sacrificing some income for other goals such as a greater sense of sovereignty or community.

A of higher T: Exactly, If it's worth paying for those, why shouldn't it be worth paying to reduce inequality?

If you're a Brexiter opposed to higher top taxes, you have to show that greater income equality is not something worth paying for. That's an argument about values, not merely technocratic points about GDP.

Nor, however, am I happy about standard leftist arguments for higher top taxes.

One of these is the marginal utility argument - that a pound is worth less to a rich man than a poor one, and so transferring it from rich to poor raises welfare.

Diminishing marginal utility, however is a more plausible story about the same person than it is about different ones. It's true that the fourth pint tastes less good than the first. But you can't base a political philosophy upon what happens in the Wheatsheaf. People have different utility functions. Some of the rich are rich precisely because they value the extra pound highly. If I'd had a higher marginal utility of income, I'd be richer because I'd have chosen to do less pleasant but better-paid work. (This paper (pdf) by Richard Layard and colleagues does not refute my argument, as it excludes the very rich)

There are counter-arguments to this. One is that the rich value income not because it buys them goods but because it's a way of keeping score: the hedge fund manager wants to be richer than the manager next door. If this is the case, higher taxes don't hurt because they bear upon all the rich: the trader at J.P. Morgan might be unhappy at paying more tax, but he can console himself with the happy thought that that bastard at Goldman's is paying even more.

I doubt, though, that this applies to all the rich: some, I know, love their yachts and fine wines. But there's an objection here - that these are acquired tastes, endogenous preferences. I find this plausible. But it confirms my argument - that we should not base policy upon a conception of welfare based upon subjective preferences.

The second argument I'm unhappy with is Saez and Zucman's - that the justification for higher top tax rates

is not about collecting revenue. It is about regulating inequality and the market economy. It is also about safeguarding democracy against oligarchy.

It is true that the rich have excessive political influence and that high taxes on them would reduce their ability to buy politicians. But it wouldn't go anything like far enough to reduce their power. Even if we had high top taxes there'd still be, as Adam Smith said, a "disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition." The press would still be owned by plutocrats. The BBC would still be biased. Millions of workers would face poor working conditions and petty tyrannies. Professionalism would still be under attack from managerialism. Nor would we necessarily have greater social solidarity: we might even have less if the rich resent higher taxes. Those who feel that politicians don't listen to them might continue to feel excluded. And so on and so on.

What's at stake here is in fact a decades-old dispute between social democrats and Marxists. Social democrats have tended to think that the unacceptable features of capitalism can be ameliorated or removed by technocratic state interventions such as appropriate tax rates. We Marxists, however, suspect that capitalism's defects are not so easily cured.