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Yes I do know that. It's still a big disincentive to bother earning more money. Why bother trying harder if the government will take half of anything extra you

Yes I do know that. It's still a big disincentive to bother earning more money. Why bother trying harder if the government will take half of anything extra you make?

nknighthb 13y ago
I understand greed, and as much as I loathe it, I also understand the mindset that looks at money as a score, but I've never understood this mindset that is unable to recognize the "score" is not absolute, and taxation does not have a 1:1 impact. Progressive taxation renders the scale non-linear. Given a hypothetical luxury good with a price of $500,000 under a current taxation regime, which do you think is more likely in a regime with, say, 50% higher taxes: That the luxury good ceases to be produced, or that its price is lowered to the point where a similar number of people as before could afford it?
- pandaman 13y ago
  I don't look at money as a score. I look at my salary as the value of my labor. I sell my labor to maximize the value of my effort. I.e. I am looking to maximize my compensation and minimize my effort. It's pretty much how everything on the market works. To answer your second question is impossible - we don't know the shape of supply and demand curves nor do we know the initial rate of taxes. E.g. if the original taxes had been 1% then it's just going to bump the price a little bit. If the original taxes had been 50% then it ceased to be produced. But if you want to know the general relation of taxes and supply and demand consider how things are going to progress as you keep raising taxes. Do you seriously believe prices are going to fall as the taxes raise?
  - nknighthb 13y ago
    I think if you cut everyone's income of fiat currency by half, the effect is not that everyone is 50% poorer. I think if you cut everyone's disposable income of fiat currency by half, the effect is not that they can afford 50% fewer luxury goods. And I don't think any of the uber-wealthy sit around and think "You know, I was going to make an extra billion in the market, but since I'd have to give up 20% to capital gains, I'll just stick all my money in a non-interest-bearing account instead.".
    - pandaman 13y ago
      JFYI - if you take every US billionaire's (all 400+ of them) money (about 1.9T) and split it among everyone in the US (300M) you get about 6300 dollars per person. It's not a lot of money. Might pay your rent and utilities for a year. And then it's gone. It's not their income, it's their whole net worth. So I'd stop fantasizing about money of uber-rich. There is not that much and it does not matter. What matters is the people who are actually paying the bulk taxes and making investments.
      - nknighthb 13y ago
        I'm not "fantasizing" about anything. I'm familiar with those numbers, thank you. They change nothing. Nothing I've said even depends on or has any direct relation to them.
to3m 13y ago
The question is a fair one, and the answer for the majority of people seems to be: because you get to keep the other half.
- bolder88 13y ago
  Well, that is a little consolation for you, true, the government lets you keep a little bit to keep you from rebelling and keep you placid. However, I feel that I'm already paying the government FAR more money than I should be, so I'm simply not bothered about trying to make them more money.
  - to3m 13y ago
    Your position is not unreasonable, nor inexplicable, just unusual. For the majority of people, income tax seems to be an annoyance rather than an active disincentive to work.

Yes I do know that. It's still a big disincentive to bother earning more money. Why bother trying harder if the government will take half of anything extra you make?

nknighthb 13y ago

I understand greed, and as much as I loathe it, I also understand the mindset that looks at money as a score, but I've never understood this mindset that is unable to recognize the "score" is not absolute, and taxation does not have a 1:1 impact. Progressive taxation renders the scale non-linear. Given a hypothetical luxury good with a price of $500,000 under a current taxation regime, which do you think is more likely in a regime with, say, 50% higher taxes: That the luxury good ceases to be produced, or that its price is lowered to the point where a similar number of people as before could afford it?

pandaman 13y ago
I don't look at money as a score. I look at my salary as the value of my labor. I sell my labor to maximize the value of my effort. I.e. I am looking to maximize my compensation and minimize my effort. It's pretty much how everything on the market works. To answer your second question is impossible - we don't know the shape of supply and demand curves nor do we know the initial rate of taxes. E.g. if the original taxes had been 1% then it's just going to bump the price a little bit. If the original taxes had been 50% then it ceased to be produced. But if you want to know the general relation of taxes and supply and demand consider how things are going to progress as you keep raising taxes. Do you seriously believe prices are going to fall as the taxes raise?
- nknighthb 13y ago
  I think if you cut everyone's income of fiat currency by half, the effect is not that everyone is 50% poorer. I think if you cut everyone's disposable income of fiat currency by half, the effect is not that they can afford 50% fewer luxury goods. And I don't think any of the uber-wealthy sit around and think "You know, I was going to make an extra billion in the market, but since I'd have to give up 20% to capital gains, I'll just stick all my money in a non-interest-bearing account instead.".
  - pandaman 13y ago
    JFYI - if you take every US billionaire's (all 400+ of them) money (about 1.9T) and split it among everyone in the US (300M) you get about 6300 dollars per person. It's not a lot of money. Might pay your rent and utilities for a year. And then it's gone. It's not their income, it's their whole net worth. So I'd stop fantasizing about money of uber-rich. There is not that much and it does not matter. What matters is the people who are actually paying the bulk taxes and making investments.
    - nknighthb 13y ago
      I'm not "fantasizing" about anything. I'm familiar with those numbers, thank you. They change nothing. Nothing I've said even depends on or has any direct relation to them.

to3m 13y ago

The question is a fair one, and the answer for the majority of people seems to be: because you get to keep the other half.

bolder88 13y ago
Well, that is a little consolation for you, true, the government lets you keep a little bit to keep you from rebelling and keep you placid. However, I feel that I'm already paying the government FAR more money than I should be, so I'm simply not bothered about trying to make them more money.
- to3m 13y ago
  Your position is not unreasonable, nor inexplicable, just unusual. For the majority of people, income tax seems to be an annoyance rather than an active disincentive to work.