3 ms·

> Oh my, you've paid about 99% tax at this point! I know you were trying to be sarcastic, but you actually made a pretty good point. A small marginal increase

by jquery 16y ago

> Oh my, you've paid about 99% tax at this point! I know you were trying to be sarcastic, but you actually made a pretty good point. A small marginal increase in taxation has a drag effect that multiplies exponentially over time.

_delirium 16y ago
That's an interesting point. I'd actually kind of like to see a tax analysis with a dynamical-system sort of bent. It seems like that must exist? If you view the economy as a highly circular network of cash flows, then different taxation policies are basically inserting different amounts of drag or siphoning into different parts of the system. Then when that same money gets spent by the government, it's being reinserted somewhere else in the same system. All rates are "100%" or "0%" in the long run, in that any dollar inserted into the network will eventually be taken as tax, and then eventually disgorged back into the non-government economy (assuming connected components/etc.). So it seems some other way of analyzing the effects is needed.
anthonyb 16y ago
Except that's not really how it works. If you reinvest your $500,000 income into stocks and they make a profit, you're getting taxed on the extra profit, since you're actually earning in excess of the original $500,000.
- jquery 16y ago
  You're right, the multiplier effect doesn't apply if you simply park your money. It will affect you indirectly, however, if you assume that it lowers your expected rate of return (fewer transactions in the free market = fewer opportunities for profit). It also increases the profit you must make to simply break even over inflation. For example, if inflation halves the value of $500,000 over twenty years, the IRS will still consider your $500,001th dollar "profit," even though you aren't making any real profit until your $1,000,001th dollar.

3 ms·

> Oh my, you've paid about 99% tax at this point! I know you were trying to be sarcastic, but you actually made a pretty good point. A small marginal increase

by jquery 16y ago

_delirium 16y ago
That's an interesting point. I'd actually kind of like to see a tax analysis with a dynamical-system sort of bent. It seems like that must exist? If you view the economy as a highly circular network of cash flows, then different taxation policies are basically inserting different amounts of drag or siphoning into different parts of the system. Then when that same money gets spent by the government, it's being reinserted somewhere else in the same system. All rates are "100%" or "0%" in the long run, in that any dollar inserted into the network will eventually be taken as tax, and then eventually disgorged back into the non-government economy (assuming connected components/etc.). So it seems some other way of analyzing the effects is needed.
anthonyb 16y ago
Except that's not really how it works. If you reinvest your $500,000 income into stocks and they make a profit, you're getting taxed on the extra profit, since you're actually earning in excess of the original $500,000.
- jquery 16y ago
  You're right, the multiplier effect doesn't apply if you simply park your money. It will affect you indirectly, however, if you assume that it lowers your expected rate of return (fewer transactions in the free market = fewer opportunities for profit). It also increases the profit you must make to simply break even over inflation. For example, if inflation halves the value of $500,000 over twenty years, the IRS will still consider your $500,001th dollar "profit," even though you aren't making any real profit until your $1,000,001th dollar.