[hollerith]

Maybe the reason it is the financial capital of the entire world is that historically the tax regime let people keep most of the money they earned.

[TimorousBestie]

Income tax rates and corporate tax rates were higher during the post-war era than they are now.

[bpt3]

Effective tax rates weren't much different, which is what matters.

[TimorousBestie]

The effective income tax rate was still on the whole higher for the wealthy in the 20th century. Depending on where you put the percentile cutoff, I’m seeing peak-to-troughs between 5-20%.

[hollerith]

And the reason most governments reduced the rate was because economists argued that the higher rate reduces economic activity so much that total tax revenue (collected by the government) is actually higher at the reduced rate. Look up the "Laffer curve".

[1718627440]

But taxes don't exist as an income flow, but to give incentives. Taxes exist to reduce economic activity for goods where you want that.

[bpt3]

What gives you that impression? I get that they are used that way at times, but the core purpose of taxation is to generate revenue for the government.

[hollerith]

That's interesting because governments often act and talk like like their goal is to maximize revenue from taxes :)

[p_j_w]

Have you any evidence for this proposition?