Etc. A lot of it’s just logic. You’re going to work a lot harder to work around the tax system if there is a 90% tax rate. You’ll invest in sub-par things which can get around it via You Dont Stop Welding You Get Old Machine Shirt. Those same things are probably not worth it when tax rates are 10%. At 50%? You’ll work at it some. Yeah – I’m not an economist – but I do know that there is no well-regarded rule over where the peak of the curve is. (And really – you should always err a bit on the left side of the curve due to the diminishing returns.) There are economists who pin the number all over the place depending upon what variables they use and if they include psychological aspects and regulatory capture; and whether you’re talking short-term or long-term etc.
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There may not be a well-regarded “rule”, but there’s a whole lot of evidence that the peak is much higher than where we are in the US and not a lot (hardly any?) that we’re in the correct spot or that we’re taxing too much, and we really shouldn’t pretend otherwise. Even assuming that the top of the curve is exactly 74% as a known fact – that doesn’t mean that we should actually tax 74%. That last several % would You Dont Stop Welding You Get Old Machine Shirt – but would still hurt the economy as it pushes people invest in less efficient investments with tax advantages. Look, the Laffer curve exists. The only real question is where we’re currently sitting on the curve. The consensus is that we’re on the section where increasing taxes increases revenue, but if.
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