@jdebacker, thanks very much for the paper references. These look helpful and I will read them closely.

To clarify point 1:

My point was just that the people facing rate 7 would be unaffected behaviorally by the rate 6 cut, and the increased revenue from people facing rate 7 could swamp any behavioral effect from people facing rate 6.

See a stylized example below.

Consider a world with two taxpayers and two rates/brackets.

**Tax Law (Pre-Reform)**

Bracket 1 is from 0 - $50 and the corresponding rate 1 is 0%

Bracket 2 is from $51 - $100 and the corresponding rate 2 is 50%.

**Taxpayer Characteristics (Pre-Reform)**

Taxpayer 1 makes $25 / year

Taxpayer 2 makes $100 / year

**Tax Liabilities (Pre-Reform)**

Taxpayer 1 owes $0

Taxpayer 2 owes $25

Total revenue: $25

Now we implement a reform where rate 1 goes to 100%.

As a result, Taxpayer 1 stops working, but Taxpayer 2’s behavior is unaffected. The rate change was inframarginal.

**Tax Law (Post-Reform)**

Bracket 1 is from 0 - $50 and the corresponding rate 1 is 100%

Bracket 2 is from $51 - $100 and the corresponding rate 2 is 50%.

**Taxpayer Characteristics (Post-Reform)**

Taxpayer 1 makes $0 / year

Taxpayer 2 makes $100 / year

**Tax Liabilities (Post-Reform)**

Taxpayer 1 owes $0

Taxpayer 2 owes $75

Total revenue: $75

So another way to put it is just that I wasn’t surprised that the revenue maximizing rate for brackets below the top one might be 100% (if only search up to 100%).