The idea of “going Galt” has been a key argument for those opposing higher taxes on the rich.

The wealthy, according to the argument, are just like everyone else when it comes to incentives. If you tax their income above a certain rate, they will stop working, stop creating jobs and stop creating wealth that gets spread around the economy. (The term “going Galt” comes from Ayn Rand’s hero in “Atlas Shrugged,” John Galt).

Yet a new paper by Jeffrey Thompson at the University of Massachusetts Amherst Political Economy Research Institute says the “going Galt” argument doesn’t hold up to close research. According to the data, “affluent households are unlikely to make substantial changes in their ‘real’ economic behavior in response to modest tax increases.”

Reviewing two earlier studies tracking American earners during the 1980s, Thompson finds that “high-income households did not alter their labor supply in response to large federal tax changes.” A second study showed that high-income doctors didn’t change their work hours at all in response to changes in state tax laws.

The study concedes that if the wealthy had to pay a tax rate of 100%, they would work less. And it says that the reported income or “taxable income” of the wealthy does change in the face of tax changes: a fact often cited by Arthur Laffer and other conservatives.

Yet Thompson says that these changes are the result of the wealthy managing their incomes through stock sales. When taxes are expected to go up, they sell more in advance to avoid them.

The study says that “these households are pursuing tax avoidance strategies, rather than altering their real economic behavior.”

Do you think the wealthy would change their work under the Obama plan?

By Robert Frank