Something I don't understand that is sure to get me flamed

[tim]

So there's this idea that if we increase taxes on the rich, then rich people will stop working so hard (that the rich work hard is already questionable, but let's go with it) and, I don't know, stop producing all the social goods that rich people produce.

I mean, I think it would be great if just increasing taxes, by, say, 2% on household income above $500,000/year would make some of those high earners say, "Goshdarnit, it's not worth it for me to earn this much money if the government is just going to take it away. I better get a job teaching in an inner-city elementary school instead, brb." But somehow, I don't think that's going to happen.

Is it *really* that easy to stop people from being greedy? I'm not sure greed would deserve its deadly-sin status if it was that easy to eradicate.

And while I'm at it, what's up with accusations of "class warfare"? Rich people have been waging war on everyone else since, oh, whenever it was that some people started being rich. (In fact, that's how you get rich in the first place.) The rest of it is just class self-defense.

Comments

[sethg]

Matthew Yglesias once observed that this argument would be a lot more compelling if the people at the very top of the income scale were, say, brain surgeons. OK, if the supply curve for brain surgeons moves down a bit, some of the top brain surgeons would retire sooner, etc.; some people who would really benefit from a top brain surgeon would have to settle for a second-tier surgeon, people who need a second-tier brain surgeon might have to wait longer for one to be available, etc.; we could then talk about whether this sort of social cost makes up for the benefit of whatever higher taxes are paying for.

But in the real United States, the people at the tippy top of the income scale work in finance. If investment bankers are suddenly faced with a marginal income that amounts to $3500/hour after taxes instead of $4000/hour, they’ll... what? Do such a sloppy job of banking that their employers are on the hook for billions of dollars in bad debt that the government has to cover lest the whole financial system collapse?