[karamazov]

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.

[khafra]

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.