> I think a lot of people think you can just depend on people's blind greed so they keep on maximizing their earnings regardless of how much they actually earn. However this is not even how it works a little bit.
Right, that's not how it works.
Most people do not try to maximize their revenue and it's why when a sector (say Tech) starts paying very high salaries it takes a long time (if-at-all) for other sector's salaries to increase despite the opportunity cost of working in those sectors being higher now.
I really do not buy an argument that Alexander Bell (and the at least 4 other people who simultaneous invented the telephone) would've given up and done subsistence farming if the tax rate was "too high". You will still have (and possible even more of it given how well DARPA works) technological advanced with higher top-bracket tax rates.
> This behavior is described in the so-called "Laffer Curve"... which is not a mathmatical formula for maximizing revenue, it is just a way to illustrate the sort of behavior you deal with when raising taxes.
> Nowadays most governments are going to have the _effective_ tax rates maxed out. Governments hire plenty of accountants and economists that have clear understanding on how all of this works.
This part is all false.
The main criticism of the Laffer Curve argument is that in practice governments are below the maximum revenue point [1].
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You've also completely ignored my initial point of 1) which is that we would've seen government receipts increase as a percent of GDP had it not been for the lowering of the tax brackets as more money was within those brackets as GDP goes up. Which would of course result in a lower deficit into a surplus (as it was during Clinton's years before his successor cut taxes).
>> I think a lot of people think you can just depend on people's blind greed so they keep on maximizing their earnings regardless of how much they actually earn. However this is not even how it works a little bit.
>Right, that's not how it works.
>Most people do not try to maximize their revenue and it's why when a sector (say Tech) starts paying very high salaries it takes a long time (if-at-all) for other sector's salaries to increase despite the opportunity cost of working in those sectors being higher now.
This makes no sense. I don't see how the observation that people don't immediately flood into programing disproves the claim that high earners will work less if taxes were higher. The two aren't at all comparable. Not everyone is cut out to be a programmer, and even if they are, it takes a non-trivial amount of time to train to become a programmer. In other words, it takes a long time for people to switch to higher paid industries. On the other hand working less costs nothing, and anyone can do that at a moment's notice.
>I really do not buy an argument that Alexander Bell (and the at least 4 other people who simultaneous invented the telephone) would've given up and done subsistence farming if the tax rate was "too high". You will still have (and possible even more of it given how well DARPA works) technological advanced with higher top-bracket tax rates.
No, they'll just kick back and retire. That might be subsistence farming (aka. cottagecore), or not.
>The main criticism of the Laffer Curve argument is that in practice governments are below the maximum revenue point [1].
Given the that the actual curve can only be estimated, and the theoretical curve levels off near the top, and the right side is steeper than the right side, doesn't it make sense to be below the maximum point? If you overestimated the peak and overshot it, the effects would be devastating. Even if you're to the left of the peak, tax raises are unpopular and cost political capital, so it makes sense that politicians aren't trying to perfectly optimize their tax rates.
Right, that's not how it works.
Most people do not try to maximize their revenue and it's why when a sector (say Tech) starts paying very high salaries it takes a long time (if-at-all) for other sector's salaries to increase despite the opportunity cost of working in those sectors being higher now.
I really do not buy an argument that Alexander Bell (and the at least 4 other people who simultaneous invented the telephone) would've given up and done subsistence farming if the tax rate was "too high". You will still have (and possible even more of it given how well DARPA works) technological advanced with higher top-bracket tax rates.
> This behavior is described in the so-called "Laffer Curve"... which is not a mathmatical formula for maximizing revenue, it is just a way to illustrate the sort of behavior you deal with when raising taxes.
> Nowadays most governments are going to have the _effective_ tax rates maxed out. Governments hire plenty of accountants and economists that have clear understanding on how all of this works.
This part is all false.
The main criticism of the Laffer Curve argument is that in practice governments are below the maximum revenue point [1].
---
You've also completely ignored my initial point of 1) which is that we would've seen government receipts increase as a percent of GDP had it not been for the lowering of the tax brackets as more money was within those brackets as GDP goes up. Which would of course result in a lower deficit into a surplus (as it was during Clinton's years before his successor cut taxes).
[1]: https://en.wikipedia.org/wiki/Laffer_curve#Criticisms