Harry Veeder wrote:
Stephen A. Lawrence wrote:
Remember the Laffer curve debates, years back? At 0% income tax the
government's net tax revenue is zero. At 100% income tax nobody works
for taxable dollars and again the government's tax take is zero. So,
the _maximum_ tax take is achieved at some tax rate L, with 0 < L < 100.
The curve which relates government tax revenue to tax rate is called
the Laffer curve, and its peak is the optimal tax rate for maximum
government income.
A 100% income tax would make for a simple flat tax system,
A "flat tax" system taxes everyone the same number of dollars. The poll
tax that brought down Margaret Thatcher in England was an example of that.
A 100% income tax takes everything you earn and gives it to the
government; you don't get to keep any of it.
I don't see the connection.
In any case please be aware that a 100% tax is a "strawman", used only
to illustrate the point that raising taxes indefinitely won't increase
the government's revenue indefinitely. And if it won't, then someplace
in the middle there must be an "optimal" tax rate.
and as long
as a significant fraction of EARNED income is returned by law
If the government must give you back your own tax dollars then it's not
a 100% tax. With a 100% tax rate on EARNED income you don't keep it and
you don't get it back.
If you get supported by the government regardless of whether you earn
anything, but the government takes every cent you earn on your own (if
any), that's a 100% tax plus complete social welfare and the name for it
is "pure communism".
people would
continue to work for taxable dollars.
Very few, not enough to make the economy run at all well.
What actually happens is the economy switches to some kind of barter
system, or people find some other way around the confiscatory tax.
There's no point in working for "money" which you never see, so people
don't do it, and the reported "taxable income" drops to zero. If that's
not possible, people leave -- right now there are many economic refugees
from France living elsewhere in Europe, because their tax system hits
some wealthy people so hard (much, much worse than anything we have in
the United States).
In "pure communism" nobody gets paid to work, everybody is provided for,
and some incentive other than financial rewards must be found to induce
people to work; otherwise they just sit around and send email all day :-)
In Russia under communism 5% of the land produced more than 50% of the
gross farm output. The 5% of the land that produced so well was the 5%
that was reserved for individual plots, where the farmers could actually
keep what they produced, and sell it if they wanted to, and keep the
money they earned. Most people work harder if they get tangible rewards
for what they do.
Many people would have left Communist Russia if they had had the chance.
I remember my father observing that he'd start believing the Communist
claims of a "worker's paradise" the day they started building walls to
keep people _out_, rather than keep people _in_. (On the other hand,
from what I've heard a lot of people actually liked the system, too;
some who successfully emigrated found it difficult and unpleasant to get
along in capitalist countries.)
Harry
