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<i>Of course it's still a wide gap, but let's not pretend these people are rich enough to retire after two years on that salary.</i> Of course they're not reti
by jedrek 13y ago
<i>Of course it's still a wide gap, but let's not pretend these people are rich enough to retire after two years on that salary.</i>
Of course they're not retiring - someone earning enough to hit that 75% tax rate isn't living like your average mope. Give them five years, though, and they could easily put that money into blue chips, bonds and other low risk investments and support a middle class family with interest.
And while I do see the difference between entrepreneurs and those who live off the margins of financial transactions, I'm not really sure why they should be treated all that differently as far as tax law goes. Kids grow up wanting to be royalty, by college the fantasy is still there, now they're just Business Superheroes, because that's how we treat the rich.
Entrepreneurs aren't magic. We're people who've decided that we either don't like working for a boss or who've looked at the numbers and said, "hey, I think I can make more working on my own than for someone." Should we be in awe of someone who "worked hard" for a few years to get paid a couple million dollars to have a competitor shut their product down? Or amazed by a company who has managed to sell their stockholders on the idea that it doesn't need to be profitable, allowing them to destroy (or disrupt, in SV terms) traditional markets, where others can't compete, because their shareholders actually demand they turn a profit.
Now, are you telling me these Superheroes of Business will look at a progressive tax rate and say, "you know what, if I thought I could make $3 million after 3 years of hard work, I would do it... but since it'll only be $2.7, I guess I'm gonna stick to my day job where I make $150k/year." Because that's the logical conclusion of what you're saying.
<i>why shouldn't everyone pay 100% taxes and have the state pay for everything</i>
Probably because that's not the logical conclusion of the reality I've described, although a lot of American businessmen do think the opposite should be true: all services should be privatized, yada, yada. That's crap, there tons of services that require long term, massive investments that will get shitty ROIs but benefit society and the economy as a whole.
We all know that, we all think people should be rich, I just don't think that income tax has the kind of dampening effect on entrepreneurship people claim it does. I for one would rather pay 50% on my 1.5mil than 25% on 150k, should it come to that.
- Silhouette 13y agoNow, are you telling me these Superheroes of Business will look at a progressive tax rate and say, "you know what, if I thought I could make $3 million after 3 years of hard work, I would do it... but since it'll only be $2.7, I guess I'm gonna stick to my day job where I make $150k/year." Because that's the logical conclusion of what you're saying. No, I'm telling you that people who are capable of and considering starting a business, several years earlier in their career than the kind of relatively uncommon success story you're talking about where millions of dollars are flying around, are going to look at a progressive tax rate where a high proportion of their earnings if they are really successful are going to get stolen away by the state in taxes and they're going to think twice. Some of them are then going to decide it's not worth it and just stick with being someone's probably relatively well-compensated employee, which is bad for their national economy because usually small businesses drive a substantial proportion of growth. Others are going to move to a more supportive environment and start their business there instead, which is bad for the original economy, though good for the new one. You're selling lottery tickets where there is no jackpot, and people who understand maths aren't going to play that game. Most people who are capable of starting a successful business (and anyone who professionally invests in young businesses) understand maths. I for one would rather pay 50% on my 1.5mil than 25% on 150k, should it come to that. OK, but what about 75% of your 1.5mil? What about 90%, a rate we actually had in the UK for much of the 1950s and 1960s? Or how about 98% on your investment income, again a rate we really had for a while? Still want to invest in a 20% share of a new business that might make a few million in this country, or would you rather invest in a SV start-up, or in energy and natural resource production in a developing economy, or any of the other vastly more profitable opportunities that would then be available to you? At some point, the numbers become prohibitive. The interesting question is when that happens, not whether it does.