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>and if we accept as a given that attempting to tax away the resulting fruits of that productivity is on the whole economically injurious to an economy I would
by DenisM 12y ago
>and if we accept as a given that attempting to tax away the resulting fruits of that productivity is on the whole economically injurious to an economy
I wouldn't accept that.
Obviously 100% confiscatory tax rates would remove personal motivation. But there is a great deal of room below 100%, that would both allow for redistribution of wealth and for plentiful motivation for the overachievers.
Consider a scheme where typical capitalist is 100 richer than typical worker - still plenty of room for motivation, don't you think?
Besides that, inheritance tax does a lot to redistribute wealth, without necessarily destroying the motivation.
Another thing I can imagine is that wealthy individual will have to spend the money he made, or have it taxed heavily. All the lavish consumption is still a good motivator for working hard and getting rich, but without as much long term inequality.
Bottom line is that motivating best performers is not necessarily incompatible with redistribution.
- dllthomas 12y agoStrictly, 100% confiscatory rates would remove personal economic motivation. There may or may not remain other motivations. Which isn't to say I favor 100% (or even exceptionally high) tax rates, merely trying to be precise.
- chrisbennet 12y agoI think that is an important point, not just a nit-pick.
- dllthomas 12y agoI probably hedged too much. I didn't mean to say that it wasn't important, just that I wasn't trying to make any particular argument with it.
- swampthing 12y agoWouldn't it only be rational then for overachievers to cease efforts once they've achieved twice what a typical worker would? That'd cut out a ton of productivity.
- lifeisstillgood 12y agoYes. In the same way it would be rational for current billionaires to stop at one yacht, one Ferrari, one mistress. Rational action is like common sense - not all that common.
- swampthing 12y agoThat may be true, but if your plan depends on people working themselves to the bone for no return, good luck to you.
- DenisM 12y agoYou're the first person to bring "no return" into this conversation. I specifically advocated smaller return, and called out that no-return is counterproductive. Which is to say you are arguing against the point neither me nor lifeisstillgood were making, the point you made up yourself.
- swampthing 12y agoYour comment capped it at 2x the wealth of a typical worker - so then once someone has achieved 2x the wealth of a typical worker, wouldn't any additional work be for no return?
- DenisM 12y agoOh, that was 100 times, not 100%. My bad. :) And it's "typical" not "maximum". If a typical capitalist is 100 times richer than the typical worker, and workers outnumber capitalists 1000:1, then 90% of the of all wealth (and thus economic power) is with the workers, yet capitalists still have their incentive to work their hardest - some of them will only be 10x, and some 200x of the baseline. The key is that in this scheme capitalists are all competing with each other for the same slice of the wealth pie, instead of competing against the workers, as they do today.
- lisper 12y ago> there is a great deal of room below 100%, that would both allow for redistribution of wealth and for plentiful motivation for the overachievers Indeed. The lowest top marginal tax rate in the U.S. between 1940 and 1980 was 70%, and it went as high as 90%. That didn't exactly kill innovation or growth.
- ScottBurson 12y agoNo, it didn't, did it? It always amuses me to reflect that the time that we were most afraid of communism was also the time that we were closest to accepting it, at least if the marginal tax rates are any indication. Anyway I don't think I could support 90% or even 70%, but I could definitely get behind 50%.
- mr_luc 12y agoI agree with the gist of these comments; all I meant by that bit put that bit was to make the argument about the inevitability of inequality's increase a more conservative one. It seems obvious (to me) that redistribution, maybe in the form of basic income, is an inevitable result of this 'natural law' of increasing inequality. That said: people did not pay those rates in the 50s[1]: The Internal Revenue Service reckoned that the effective rate of tax in 1954 for top earners was actually 70 percent. Or lower. Marc Linder, a law professor at the University of Iowa, has shown that a more comprehensive interpretation of income that includes capital gains suggests the real effective tax rate for millionaires was 49 percent in 1953. The effective rate dropped throughout the decade, reaching 31 percent by 1960. That 31 percent is just slightly higher than the 29 percent level a Congressional Budget Office report figures the average effective tax for the top quintile will be in 2014. --- [1] http://www.bloombergview.com/articles/2013-01-02/1950s-tax-fantasy-is-a-republican-nightmare http://www.bloombergview.com/articles/2013-01-02/1950s-tax-f...
- ScottBurson 12y agoJust to be clear, lisper and I were talking about marginal tax rates, not overal effective rates. Only for the very highest earners does the effective rate approach the top marginal rate.
- lifeisstillgood 12y agoI understand that Warren Buffet pays about 10% tax - less than his cleaner, so while there is room below 100% lets just concentrate on ensuring roughly the same rates of tax apply to all. That will radically change the game.
- nine_k 12y agoWhat about the concentration of wealth required to open a large enterprise? I mean, imagine that you have some bright ideas about building spaceships or electric cars or microchips, etc. How would you start a Space X, or a Tesla Motors, or an Intel without first accumulating some resources, well beyond the "100x the typical worker" level? Well, you could borrow it from several hundred other wealthy people — but they'd want nice quarter reports and obviously low risk.