This just in..The perfect top marginal  rate is 70%.

 Brad Delong says that  Paul Krugman says that Mark Thoma says that Emmanuel Saez and Nobel laureate Peter Diamond say  that's the sweet spot where the Government achieves the maximum overall good 

Good being defined as the Govt causing as little unhappiness as possible while collecting as much  cash as possible. Or balancing the fiscal requirements of the deficit with  the moral need to do that as painlessly as possible.

Making an omelet without breaking eggs.

As to unhappiness ,say Diamond and Saez, the superrich  have so much of everything that they aren't made happier by adding even  one tiny additional yacht to the 17 they have stashed in every hurricane hole from Venice to Virgin Gorda. Tax them at 70% and not only won't it make them unhappy , they won't notice.

So why not tax them at 71%? Why not tax them at 91%? At 99%?

 Two reasons . First . we're good guys . We don't want them to cry. And here Brad  refers us to Adam Smith who wrote

A  stranger to human nature who saw the indifference of men about the misery of their inferiors ,and the regret and indignation which they feel for the misfortunes and sufferings of those above them would ....imagine....death [would be]more terrible  to persons of higher rank , than to those of  meaner stations.

We like thinking about the lives of the rich, said Smith, and from there it's an easy step to wanting to avoid making them unhappy.

And the second reason?  HT to Mr.Laffer.The very rich didn't get and keep their very richness by being stupid. And there actually is some point where they'd relinquish the heavy burden of writing a monthly check to support the most recent  new venture they'd decided to back.  Clearly if the marginal tax rate is 101% you're going to save yourself  that expenditure of ink and energy.So it's got to be some way south of that.

Smith imagined a rich man who

devotes himself forever to the pursuit of wealth and greatness..labors night and day..serves those whom he hates ,,,and 

[when dying] he begins at last to find that wealth and greatness are mere trinkets

In short, says Brad ,we don't wish to disrupt the perfect felicity ...of the rich and famous; on the other hand , we don't wish to add to the burdens of those  who have spent......their time and energy [in ways that we benefit from] These two arguments are not consistent .

but never mind, didn't someone say that consistency is the hobgoblin  of little minds. Oh yeah, it was that Johnson fellow.