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Correct. There are decreasing returns to scale on taxation (which also justifies the Laffer curve/supply side/Voodoo economics, but that's another set of philos

by tomrod 4y ago

Correct. There are decreasing returns to scale on taxation (which also justifies the Laffer curve/supply side/Voodoo economics, but that's another set of philosophical problems). The literature on optimal taxation is large and interesting.

s1artibartfast 4y ago
I agree that someone could make an argument about losses and effectiveness, but my point was even simpler than that. When it comes to someone's willingness to work more to help another, I think contact and proximity to the recipient plays a big factor in what people are willing to do.
PaulDavisThe1st 4y ago
the laffer curve is an abstraction, a thought experiment with no axis labelling, and no understanding of whether the axes scales are linear or not. it is therefore completely useless when it comes to making policy, because it provides absolutely no information on whether an X% tax will increase or decrease revenues. there are possible (imaginary) scenarios where the actual shape of the curve will result in increasing tax revenues up to above 90% taxation, and others where revenues drop with anything above 0% taxation. nothing about the concept of "decreasing returns to scale on taxation" is quantitative, and it is therefore essentially useless. I mean, sure, you can make the theoretical argument that "surely above some level of taxation, any further increase will result in decreased revenues", but since it is impossible to know what that level is, the argument is pointless.
- tomrod 4y ago
  Indeed. Though there are studies that seek to estimate this in various ways (e.g. "no happier once you have $75k in wealth").
- mech765 4y ago
  It seems to me that you have confused "decreasing returns" vs "negative returns."
  - PaulDavisThe1st 4y ago
    in what sense?
  - tomrod 4y ago
    Negative returns could indeed happen in cases of enforcement cost increases, but otherwise I think you're right.

by tomrod 4y ago

s1artibartfast 4y ago

I agree that someone could make an argument about losses and effectiveness, but my point was even simpler than that. When it comes to someone's willingness to work more to help another, I think contact and proximity to the recipient plays a big factor in what people are willing to do.

PaulDavisThe1st 4y ago

the laffer curve is an abstraction, a thought experiment with no axis labelling, and no understanding of whether the axes scales are linear or not. it is therefore completely useless when it comes to making policy, because it provides absolutely no information on whether an X% tax will increase or decrease revenues. there are possible (imaginary) scenarios where the actual shape of the curve will result in increasing tax revenues up to above 90% taxation, and others where revenues drop with anything above 0% taxation. nothing about the concept of "decreasing returns to scale on taxation" is quantitative, and it is therefore essentially useless. I mean, sure, you can make the theoretical argument that "surely above some level of taxation, any further increase will result in decreased revenues", but since it is impossible to know what that level is, the argument is pointless.

tomrod 4y ago
Indeed. Though there are studies that seek to estimate this in various ways (e.g. "no happier once you have $75k in wealth").
mech765 4y ago
It seems to me that you have confused "decreasing returns" vs "negative returns."
- PaulDavisThe1st 4y ago
  in what sense?
- tomrod 4y ago
  Negative returns could indeed happen in cases of enforcement cost increases, but otherwise I think you're right.