In the boom times, the tension between tax and spending was muted. The government made enough money from relatively modest taxes to fund increasingly elaborate spending plans (in the UK, forgetting that spending should be counter-cyclical – but that’s another matter), meaning that while the issue of taxation existed – as it always goes and always will – it was relatively easy for the government to fend off.

We’re not in the boom times any more, however, and thus the issue of tax optimisation has come up again. The less tax government spends, the less it can spend on services; but the more tax it takes, the less money there is in the real economy for people to spend, hitting jobs, wages, and ultimately taxes. Tax is the Jörmungandr upon which public policy is built, and the question of how much you can tax before the negative impact on the economy outweighs the spending benefit has sharpened over the last half-decade.

As a result, lots of different groups are looking at the question in different ways (as I write this, Andrew Neil is debating Laurie Penny on the retrospective merits of the Community Charge – aka the Poll Tax. It’s not going well for Brillo). And it’s not just the usual leftie malcontents; in America, the very rich – led by the world’s second-richest man, Warren Buffet – are themselves questioning the levels of tax levelled upon them: Buffet famously claimed to pay a lower rate of tax than his assistant.

Increasingly there are numbers to back the various positions up. Shortly before Christmas, a group of economists – Thomas Piketty of the Paris School of Economics, Emmanuel Saez of the University of California, Berkeley, and Stefanie Stantcheva of MIT – put out a paper (pdf) detailing optimal rates of top-rate tax. The results are surprising.

Kevin Drum elaborates on the results, but in short, the paper asserts that top rates of tax can go as high as 76% without inflicting economic damage greater than the net benefit derived. The writers of the paper take a conservative view of behavioral elasticity, as well, so the risks of the rich “going Galt” and fleeing to tax havens is priced into that calculation. There is some historical evidence to support that, too. The UK’s top rate of tax, set at 50%, has made next to no difference to wealth creation since it was implemented a year and a half ago. Furthermore, Martin Feldstein of Harvard found that the 1986 cut in the US top rate of tax, from 50% to 28%, made no perceptible difference to the gross tax yield.

Feldstein does not conclude that taxes can be raised, however. His conclusion is that the tax based needs to be broadened by eliminating reductions. To be fair, the other paper makes a similar point. Have a high tax rate may not intrinsically undermine the economy, but it’s a wasted effort if you still allow people to find ways to avoid paying it. So the first task of tax reformers must be to minimise such opportunities by having a broader tax base, better enforcement and similar tax rates for different kinds of income.

And that’s the problem. Even in small countries – like Sweden – keeping the exchequer in order is a massive challenge. For countries like Britain and America, with a vastly diverse economy and an especially ornate system of financial services and products, any attempts to design a straightforward tax system run into a conflict between fairness and flexibility. Schemes such as that designed by the Deputy Prime Minister, to raise the income level at which tax is charged on the lower band, may be the most straightforward way to force the issue. Removing pressure at the bottom of the pile has to result in increasing it at the top, and if these reports are to be believed, then the top has plenty more to give.