Symmetry wrote:Sorry dude, but you didn't deal with my argument. My argument was that rates of tax above 75% for high earners, albeit not at same threshold, have occurred in the past in the US too, and not significantly affected prosperity. J9B suggested that this was due to wartime policies, and I pointed out that that was not necessarily true- there were periods where the tax rate was above 75% in peace time, and that tax cuts from the 75% rate occurred during wartime, specifically the Vietnam war.
Your argument, if I understand it correctly, is that these are not real examples of taxation because of nominal vs deadweight costs, but you don't actually provide any figures comparing any of them. Your argument amounts, yet again, to a dismissal of any kind of comparison that disagrees with your point of view; a few weak comparisons when your point of view is accepted; and predictably, a .gif file.
You may well be right, of course, but if you're just saying maybe it ain't so, that's weak sauce.
Symmetry, I greatly admire your commitment to continuing this debate, and I am glad that we are past the point of trolling and childish "nyah nywah nywhhahh" attacks from both parties (i.e. you and me--yes, I'll admit that both of us we're inefficiently debating, or rather we were like ships sailing past each other in the dark).
Now, I've been having a great time drinking plenty of Joel Gott wine and Carlsberg Elephants while discussing very fun stuff with people in the "real" world; however, given these constraints, I'll attempt to rationally respond to your post:
The claim in your first sentence is highly debatable (i.e. the underlined), and I do not readily agree with john9blue's wartime explanation. So, for the sake of typing-time and clarity, I will only use my Deadweight Cost argument. (However, the nominal v. real value argument provides a huge problem with your defense, which was based on that link. This, I will discuss another time).
(1) Deadweight costs refer to the decreased volume in trade. This can't be seen. It's a counter-factual point which I'm making. Nobody can measure the volume of trade which could have occurred had taxes not been so high. So, my point is that if taxes of 75% on million dollar incomes had been reduced, there would have been more production, more trade, etc. "How do I know?" you may ask:
Let's look at incentives, for example. Under a 75% tax for millionaires, think of it this way:
Mr. Capitalist Pig looks at an investment opportunity (which brings jobs, goods, and profits into the economy). He thinks "For every $1 I could earn, I am taxed $0.75; therefore, I only earn $0.25. And, for every loss, which I incur, I lose $1 for every $1 invested. So, do the risks of this seemingly profitable endeavor outweigh my expected profits?" Well, this depends.
Let's say there is no tax on this income bracket:
If Mr. Capitalist Pig were to earn 100% of his profits from his endeavor, he would be very likely to follow this endeavor because the payoff would be much greater. The risks of a loss are reduced because the $1.00 for $1.00 earnings of Mr. Capitalist Pig's endeavor overcome the potential loss (because there are no taxes). Would Mr. Cap. Pig be willing to engage in this endeavor if his earning were only $0.25 after tax? If we say, "No," then there's your deadweight loss.
Why is there a deadweight cost? The decision to expand or to create a business is foregone because the taxes are too high to offset the risk and potential losses of the decision. That is the essence of deadweight cost/loss.
Before I move on to the "nominal v. real value" argument, let us first achieve mutual understanding of my above argument. So, at this point, do you understanding what I'm typing? I'm in no way trying to be arrogant--I really want to know that we have achieved mutual understanding. So, if you have any questions at this point, please ask me, so that I can clarify.
