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As you likely recognize, that's a completely irrelevant point. To demonstrate: let's try 0% tax and see how that goes. Like other things in economics, there is

As you likely recognize, that's a completely irrelevant point. To demonstrate: let's try 0% tax and see how that goes. Like other things in economics, there is an elasticity to the impact of reducing taxes. Going from 80% to 50% makes a big difference. Going from 35% to 39%? I'm not sure it packs the same punch.

mhartl 14y ago
Of course a 100% tax rate is absurd, but it's not completely irrelevant. In particular, I bet that the current total effective tax rate (including not just income taxes but also FICA, sales tax, property tax, and implicit taxes from market interventions such as farm subsidies and the minimum wage) is already supra-optimal for economic growth. A wise and just sovereign—such as a time-teleported and quickly-brought-up-to-speed Marcus Aurelius—would likely find that he could increase tax revenues by lowering (and streamlining) tax rates across the board.
- melvinram 14y ago
  This bet that current total effective tax rates are supra-optimal for economic growth is based on what? (I'm not agreeing or disagreeing. I'm genuinely curious on your reasoning.) The gigantic topic of the upcoming US elections is how taxes should change, if at all. A few generic options that being presented: a) Don't change. b) Increase on those making $250k+ c) Lower taxes on everyone, while removing loop holes in aims to increase the overall base of tax payers. The argument against option b is that it'll kill investment and economic recovery. That's what this article is disputing. It's not saying that option a, b or c is good or bad. It's saying that the argument against option b that is most often used isn't true when you look at the 65 year economic history of America.
  - mhartl 14y ago
    This bet that current total effective tax rates are supra-optimal for economic growth is based on what? It's based on intuition. That's why it's a bet, not a concrete claim.
    - jeltz 14y ago
      And now we have science which indicates the bet might have been incorrect so we should reevaluate the bet.
zeroonetwothree 14y ago
A 0% tax rate would certainly work better than a 100% tax rate. After all, we had no income taxes until the 20th century.
- DannoHung 14y ago
  We had no notion of modern corporations until the mid-19th century.

mhartl 14y ago

Of course a 100% tax rate is absurd, but it's not completely irrelevant. In particular, I bet that the current total effective tax rate (including not just income taxes but also FICA, sales tax, property tax, and implicit taxes from market interventions such as farm subsidies and the minimum wage) is already supra-optimal for economic growth. A wise and just sovereign—such as a time-teleported and quickly-brought-up-to-speed Marcus Aurelius—would likely find that he could increase tax revenues by lowering (and streamlining) tax rates across the board.

melvinram 14y ago
This bet that current total effective tax rates are supra-optimal for economic growth is based on what? (I'm not agreeing or disagreeing. I'm genuinely curious on your reasoning.) The gigantic topic of the upcoming US elections is how taxes should change, if at all. A few generic options that being presented: a) Don't change. b) Increase on those making $250k+ c) Lower taxes on everyone, while removing loop holes in aims to increase the overall base of tax payers. The argument against option b is that it'll kill investment and economic recovery. That's what this article is disputing. It's not saying that option a, b or c is good or bad. It's saying that the argument against option b that is most often used isn't true when you look at the 65 year economic history of America.
- mhartl 14y ago
  This bet that current total effective tax rates are supra-optimal for economic growth is based on what? It's based on intuition. That's why it's a bet, not a concrete claim.
  - jeltz 14y ago
    And now we have science which indicates the bet might have been incorrect so we should reevaluate the bet.

zeroonetwothree 14y ago

A 0% tax rate would certainly work better than a 100% tax rate. After all, we had no income taxes until the 20th century.

DannoHung 14y ago
We had no notion of modern corporations until the mid-19th century.