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This is just false. Even Slate, which is hardly a right-wing bastion, concedes that there is an effect (http://www.slate.com/articles/news_and_politics/explain
by jeremyt 12y ago
This is just false.
Even Slate, which is hardly a right-wing bastion, concedes that there is an effect (http://www.slate.com/articles/news_and_politics/explainer/2011/02/if_they_tax_do_we_relax.html http://www.slate.com/articles/news_and_politics/explainer/20...)
If we subjected you to a 99% tax rate tomorrow, would you work less than before? A yes answer is all that is needed to concede the point theoretically. Then, we're just arguing about magnitude. And I just don't believe you if you answer no: Who is going to work a full-time $50,000 a year job when they're only taking home $500/year?
For further reading, Paul Graham has argued that redistribution through higher tax rates leas to less entrepreneurship (http://www.paulgraham.com/inequality.html http://www.paulgraham.com/inequality.html)
- SnowProblem 12y agoIf you suddenly went from a 30% to 40% tax rate, couldn't you imagine working more to make up the difference? There is a lot of social pressure to maintain lifestyle. American wages have stagnated since the 70s and people are working longer hours than ever.
- jeremyt 12y agoTo answer your question honestly, it's going to depend on how much disposable income I have. If I'm making enough to pay for all of my needs and wants after the rate goes up, then I'll probably work less... Because what's the point? If the difference is whether I can pay rent or not, then I'll probably work more.
- adrianN 12y agoThis argument assumes that there is a monotonic effect of taxes on my desire to work. I'd argue that if taxes were raised a little, I would work a little more. I think therefore that it is more reasonable to assume that the taxes->work hour function is concave.
- jeremyt 12y agoI'm willing to concede that the effect is uncertain at low and middle incomes, but I think it has been shown quite convincingly that when tax rates go up the rich work less.
- deleted 12y ago[deleted]
- specialist 12y agoReported income is not comparable to effort or economic activity. The Slate article states that when income tax rate increases, the rich report less income, by fudging their taxes. It says nothing about rich people expending less effort.
- jeremyt 12y agoYou should read paragraph number 5 again. It concedes that at least 25% of the reduction in reported income is due to working less.
- specialist 12y agoYup. One of the options for a middle class couple is the non breader winner of a middle class couples could decide to work less. I reread your comments (upthread). I imagined you were trotting out the "discouraged rich people" trope. My apologies.
- jeremyt 12y agoWell, to be fair to you, I was trotting out the discouraged rich people trope. It's rich people who have the most elastic working hours and income.