Reactions on a couple of secondary points: First, there's a huge drawback in the "reward accordingly to the value you produce" paradigm: you can't punish peopl

Reactions on a couple of secondary points: First, there's a huge drawback in the "reward accordingly to the value you produce" paradigm: you can't punish people accordingly to the value they destroy. So if you estimate that an operation has 50% chances of winning $100M, and 50% chances of loosing $200M, your rational interest is to make that operation, even if it's not in your employer's interest, because you can't lose more than your job (this only works if your salary is much lower than $100M, but you can pick other numbers). This effect is much stronger when individuals work for extremely wealthy companies, but I'd guess the protection from bankruptcy must have some comparable effect. It depends on your national business laws obviously. About the footnote "[3] Progressive tax rates will tend to damp [the] effect [of money as an incentive]": it's only true if you suppose that money has linear value for individual, i.e. if going from $50K to $550K is roughly as valuable as going from $5M to $5.5M. But if you suppose that money has less importance when you have more of it, states should rather get it from where it's the least efficient as an incentive, i.e. from wealthier taxpayers.