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by khafra 5226 days ago
> Those who do produce the wealth unproductive others live on will decide to not bother (look up "go Galt").

Has this ever happened? Has anyone at any wealth level ever simply stopped making money because he was upset about taxes? I hear a lot of small-time sole proprieters talk about it, but I've never heard reliable reports of it actually happening.
2 comments
karamazov 5226 days ago
pg has a great essay on this: http://www.paulgraham.com/inequality.html.

A quick summary is that yes, people probably do choose not to do certain kinds of work when taxes are too high, but not in the way that Bill O'Reilly tends to advertise it - it's unlikely that someone is going to quit a high-paying job because their marginal tax rate went up a point. However, if you're undertaking an endeavor with a 5% chance of success, and a 30x tax-free payout in case of success (relative to a safe option), your expected payout is 1.5x with no taxes; 1.35x with a 10% tax rate; and 0.9x with a 40% tax rate. Whether or not you'd take the risk in the first two cases varies from person to person, but in the latter scenario, most people wouldn't bother; you'd have better expectancy at a roulette table.

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khafra 5226 days ago
I appreciate the EV calculation. That would probably raise the marginal value at which someone like Warren Buffett would buy a company, fix its problems, and make it productive again. I doubt he'd shut down Berkshire Hathaway, or that it would even slow down people intent on creating a startup; but it would have a marginal effect.

Still a bit different from the classic "going galt," though.

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yummyfajitas 5226 days ago
Has anyone at any wealth level ever simply stopped making money because he was upset about taxes?

Yes, it happened to Ronald Reagan. When the top tax rate was 90% (he was an actor at the time), he chose to make only two movies/year. He saw little point in making more movies since he wouldn't get paid for it.

http://toomuchonline.org/the-tax-that-turned-ronald-reagan-r...

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batista 5226 days ago
Well, fewer Reagan movies. How is this a BAD thing? He was a bad actor, and a worse president.

Meanwhile, a true artist, would make movies no matter what the top tax rate was, because he had the urge to. Artists have worked for nothing for ages, in order to create.

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