Jim Manzi’s thoughts on Paul Krugman’s argument with Paul Krugman.
7 thoughts on “Do Job Creators Matter?”
They have a vision.
Yes, we do. But I’d have a hard time seeing through a 70% marginal tax rate. I mean, damn, it’s not X-Ray vision! It’s not as if we lack visions which don’t pay-off bigtime but we might enjoy more…
When the tax rates were lowered sharply in the 1980s, the focus shifted from tax avoidance to increasing income. When combined with all the other taxes people have to pay, when the total tax bill gets too high, a lot of people will just stop trying to earn more. The result will be less revenue, not more. But then, to fascists like Krugman and Obama, it’s less about increasing revenues and more about “fairness.”
It’s worth noting here two things. First, there’s no reason to optimize tax revenue. The primary purpose of the Laffer curve is to show that there is at some point diminishing returns (unless your idea of value is “fairness”) to higher taxes, not to find the sweet spot at which tax revenue is optimized. Society doesn’t exist to optimize federal revenue.
Second, incentive is not the only reason to allow the productive to keep more of their wealth. They also can plow that wealth into other endeavors. It’s worth noting that while reinvestment in the business is usually tax deductible, the same isn’t true for wealth either gained through income or placed in a new business not connected to the old one.
For example, Elon Musk used the capital he gained from Paypal to create three new businesses (SpaceX, Tesla Motors, and SolarCity). While he probable avoided a considerable amount of capital gains taxes, it’s likely that higher income and capital gains taxes would mean less money for these businesses.
For another example, it’s common for someone who earns most of their money from income to attempt to start a business. The more that is taken out of their paychecks for income taxes, then the less they have for that new business.
And of course, there’s always ethics, but that seems to be out of fashion. It’s amazing how fast even someone who comes from nothing to make it gets (figuratively) stabbed in the back.
To those who worship at the alter of big government, more revenues is all they care about. It gives them more money to buy votes.
Accepting that maximizing tax revenue is the goal, the Laffer curve describes a tax rate beyond which further raises are futile. (left|theft)ists seem to routinely deny such a futility point at less than a 100% tax rate.
On top of tax revenue, ethics, and exponential growth of the economy as factors, there’s a consideration that there will be less demand for government social services in a strong economy. This last seems a likely suspect for why (left|theft)ists favor high tax rates. And a good reason for those who genuinely care to favor a tax rate less than optimum for revenues.
Society doesn’t exist to optimize federal revenue.
Yes, we do. But I’d have a hard time seeing through a 70% marginal tax rate. I mean, damn, it’s not X-Ray vision! It’s not as if we lack visions which don’t pay-off bigtime but we might enjoy more…
When the tax rates were lowered sharply in the 1980s, the focus shifted from tax avoidance to increasing income. When combined with all the other taxes people have to pay, when the total tax bill gets too high, a lot of people will just stop trying to earn more. The result will be less revenue, not more. But then, to fascists like Krugman and Obama, it’s less about increasing revenues and more about “fairness.”
It’s worth noting here two things. First, there’s no reason to optimize tax revenue. The primary purpose of the Laffer curve is to show that there is at some point diminishing returns (unless your idea of value is “fairness”) to higher taxes, not to find the sweet spot at which tax revenue is optimized. Society doesn’t exist to optimize federal revenue.
Second, incentive is not the only reason to allow the productive to keep more of their wealth. They also can plow that wealth into other endeavors. It’s worth noting that while reinvestment in the business is usually tax deductible, the same isn’t true for wealth either gained through income or placed in a new business not connected to the old one.
For example, Elon Musk used the capital he gained from Paypal to create three new businesses (SpaceX, Tesla Motors, and SolarCity). While he probable avoided a considerable amount of capital gains taxes, it’s likely that higher income and capital gains taxes would mean less money for these businesses.
For another example, it’s common for someone who earns most of their money from income to attempt to start a business. The more that is taken out of their paychecks for income taxes, then the less they have for that new business.
And of course, there’s always ethics, but that seems to be out of fashion. It’s amazing how fast even someone who comes from nothing to make it gets (figuratively) stabbed in the back.
To those who worship at the alter of big government, more revenues is all they care about. It gives them more money to buy votes.
Accepting that maximizing tax revenue is the goal, the Laffer curve describes a tax rate beyond which further raises are futile. (left|theft)ists seem to routinely deny such a futility point at less than a 100% tax rate.
On top of tax revenue, ethics, and exponential growth of the economy as factors, there’s a consideration that there will be less demand for government social services in a strong economy. This last seems a likely suspect for why (left|theft)ists favor high tax rates. And a good reason for those who genuinely care to favor a tax rate less than optimum for revenues.
Society doesn’t exist to optimize federal revenue.
I may have to borrow that one Karl.