Quote:
Originally Posted by peter12
Obviously millionaires weren't reduced to paupers, but they were disincentivized from making more money - ie. taking risks with their fortune which is actually good for the economy and workers, generally.
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I would disagree. The millionaires up in those top brackets would spend their way out of their tax problem, which is good for the economy/industry as they'd have to incur business expenses, ultimately buying products and services from within that industry.
Using the absurd 91% bracket then, imagine a business whose profit is $500k into that bracket. They'll only be left $45k after taxes on that $500k, so rather than go that route, they'd likely instead choose to spend $500k on capital/infrastructure/goods/services, and essentially get what is worth $500k for $45k (all the government would have left them with anyway, had they sat on their hands).
I'm obviously over-simplifying here, and Locke would know far more on the particulars. Ultimately, the point I'm trying to make is that I believe when profits are subject to high taxes, it will typically increase spending by that business in order to avoid taxes.