[quote=jstoesz][quote] little empirical evidence that rate changes, by themselves, either promote or reduce the availablity of capital or labor.[/quote]
This statement is just asinine. Rates change behavior…incentives and disincentives work. Small changes of the tax code are just too hard to tease out of all the other factors that go into the economy
If you tax labor at 100% you will get less labor then if you tax it at 90% and even less than if you tax it at 80% etc.
The same goes passive income and investing. Incentives work.[/quote]
We’ve never had a 100% marginal rate. At that level, I suspect you’re right. Since the middle of the last century, we’ve had marginal rates as high as 91% and for almost all of the last 50 years, the highest rate on earned income was 50% or less. During that period, there has been no empirical evidence that top rate changes, by themselves, either promote or reduce the availablity of capital or labor. Both investors and workers pursue the highest after tax income, regardless of the top marginal rates.
