3 ms·

The motivation is the money, not the rate of taxation on your income above a certain threshold. People still work to be somewhat richer even if there's a headwi

The motivation is the money, not the rate of taxation on your income above a certain threshold. People still work to be somewhat richer even if there's a headwind. History and logic demonstrate this. The point at which the rich say "meh, screw it" is short of 100%, but it's not like we need a regressive set of tax tables to get people to work.

devereaux 8y ago
There are different sets of motivations for different people. Saying this differently and with purposefully fake numbers, if (at your current pre-tax income) increasing your income by 50% would only give you 5% of that in cash you can use, would you really do that? Or do you have alternative use of your time (like leisure) that would give you more happiness? You may say you would, but the reverse calculation then applies: if you would lose 5% extra cash by cutting your pre-tax income by 50%, wouldn't you do it? Many people would. Just look at the number of people who want to work 4 days or less. Of course this assume income is a function of time spent working but it is very often the case. The resulting elasticity will be different for everyone, but there will be a non null elasticity at the population level.
- DFHippie 8y ago
  I don't see where we disagree.
  - devereaux 8y ago
    We disagree in that at any non 0% tax rate, some people will respond by adjusting the amount of work supplied. The effect may only be measured at the population level to take into account the difference between people, even if we can predict it is likely to be very low close to 0% and very high close to 100
aeternus 8y ago
Yes, but it is important to close the tax loopholes first. Because it is also quite logical to spend 10% of your income on a fancy tax expert if they can save you an extra 11% on taxes. That work is of little value to society or the government.

devereaux 8y ago

There are different sets of motivations for different people. Saying this differently and with purposefully fake numbers, if (at your current pre-tax income) increasing your income by 50% would only give you 5% of that in cash you can use, would you really do that? Or do you have alternative use of your time (like leisure) that would give you more happiness? You may say you would, but the reverse calculation then applies: if you would lose 5% extra cash by cutting your pre-tax income by 50%, wouldn't you do it? Many people would. Just look at the number of people who want to work 4 days or less. Of course this assume income is a function of time spent working but it is very often the case. The resulting elasticity will be different for everyone, but there will be a non null elasticity at the population level.

DFHippie 8y ago
I don't see where we disagree.
- devereaux 8y ago
  We disagree in that at any non 0% tax rate, some people will respond by adjusting the amount of work supplied. The effect may only be measured at the population level to take into account the difference between people, even if we can predict it is likely to be very low close to 0% and very high close to 100

aeternus 8y ago

Yes, but it is important to close the tax loopholes first. Because it is also quite logical to spend 10% of your income on a fancy tax expert if they can save you an extra 11% on taxes. That work is of little value to society or the government.