Re: Tax Cuts Don't Boost Revenues

On Feb 23, 4:00=A0pm, Jeffrey Turner <jtur...@[EMAIL PROTECTED]
> wrote:

> > Actually, you can see something similar at low ends of the
> > income distribution.
>
>
>http://economics.about.com/b/2008/02/10/marginal-tax-rates-of-over-10...
>
> > Welfare recipients have at least some incentive to work because of the
> > future prospect of rising above a welfare existence.
>
> Maybe. =A0But with "outsourcing" and "downsizing" and dead-end jobs it
> isn't too much of a surprise - especially with tax rates _above_ 100%.
> And it's much worse psychologically, because we were discussing
> everyone having to pay 100%

No, that's not a necessary condition for the Laffer curve to be true.
As a thought experiment, imagine 100 people at 50K/yr and a constant
tax rate, and one person at 1 million per year and a marginal tax rate
that suddenly increases to 100% for incomes above $500K. That one
person will rationally choose more leisure over working for nothing
(or less), and cut back his work activities to decrease his income to
$500K in exchange for more free time. Which also reduces overall tax
revenue.

> (I want to interject that the other lie in
> the Laughable curve is that it obfuscates the difference between total
> and marginal tax rates. =A0A marginal tax rate of 100% on income over
> five or ten million might also have a salutary effect further down the
> income scale).

The supply siders constantly harp on marginal rates. You can hardly
accuse them of obfuscating marginal tax rates when that's a major part
of their spiel.

It's unclear why you think capping high incomes would have a positive
effect down the income scale. The more likely outcome would be more
lavish non-monetary compensation for executives and stockholders,
combined with decreased economic activity that hurts working stiffs.
If you're making $5 million a year, but want a few million more
because you've got your eye on a tropical island, odds are you're
going to have to go out and earn the money, probably by hiring people
to help you. If your income is capped there's absolutely no reason for
you to do that. Another likely outcome would be capital flight.

>=A0The marginal tax rates in the U.S., where health
> insurance is an issue, are probably worse than in Canada. =A0But if
> everyone was taxed at 100%, job duties might be spread more evenly and
> pointy-haired bosses would soon find themselves outside of management.

Getting a job very often includes health benefits (about 70% offer
them.) Getting health insurance via the employer is actually an
artifact of an earlier attempt to limit market-priced wages during
WWII. The government instituted wage controls in an attempt to keep
inflation down, so employers tried to attract employees via non-
monetary compensation such as health benefits.

> I'm going to guess that the top-down, authoritative structure of many
> workplaces might have to change if there were 100% taxation, and that
> wouldn't be such a bad thing.

That's just goofy. The jobs would be a lot more unstructured in the
sense that many wouldn't exist anymore, I'll give you that. But why on
earth would you think that the structure of the workplace would
change? All the socialist paradises out there are run pretty much the
same way as capitalist workplaces, only badly.