Only 27% of what they earned above $10 million. They keep considerably more of the first $10 million they earn.
Did the entire nation sleep through the day they explained how marginal tax rates work, or something?
Probably not.
> Doctors, lawyers, and managers, at the point in their careers where they are the most experienced and capable, will likely decide in meaningful numbers it is no longer worth putting in the hours if they only get to keep 27% of what they earned.
This rate cuts in for income over $10 million/year. That's on the order of 5 times the cutoff for the top 0.1%, and the top 0.1% is on the order of 150k tax payers in a nation of 300+ million people. Even if the whole group decided to stop doing work that would subject them to the new rate (which is different than "early retirement" -- more on that next), we aren't talking about giant numbers.
And the way marginal taxes work, if they are okay with putting in effort as long as they are getting as good as they do under the current tax system but unwilling to do so at the new rate that would kick in at $10 million, then they wouldn't stop working entirely, they'd just stop doing the extra work to go over $10 million a year.
Which probably isn't that much of the work they are already doing in many cases, and, in any case, so what? It opens up more opportunities -- even if you assume no one is willing to do work that would only return what income over the new top marginal rate would return -- for people who are currently making less than the point at which that new top rate kicks in. So, the main effect would be the super rich having somewhat more leisure time (or making decisions less weighted by maximizing financial returns and more based on other factors, which may not always mean less total working time, but better working conditions or more enjoyable work) and everyone else having more income-earning opportunities available.
Not exactly the end of the world.
https://www.gov.uk/income-tax-rates/current-rates-and-allowa...
Taxes are too low in the US, the lowest they've been in ~100 years. They must go up, and if people in the highest income brackets make less, so be it. You're still making 7-8 figures/year. At some point, enough is enough. Who is to say what enough is? Society, the system in place enabling you to earn that money in the first place.
My apologies I wasn't getting that point across.
I wonder how many people earning more than ~$1 million per year really care about the exact level compensation they get (there are an awful lot of people that reduce their working time well before that level of income).
> would you put in a million dollars of effort to net a quarter of that in return?
Even if I was paying 27% on the first $10MM, putting in $1MM worth of effort would get me a return of 170% per year.
Because they want the things money can buy.
> Would you take up a career where despite long & expensive education, long hours, hard work, and lives-in-your-hands responsibility, you kept just 27% of your income?
Maybe, maybe not, but, anyway, that's not how marginal rates in a progressive tax system work. Even if the marginal rate that kicks in at $10 million is 73%, that means you only keep 27% of the amount after $10 million, and some greater amount of the part below $10 million. Obviously, an increase in the top marginal tax rate decreases the incentive to work to increase income once you've reached the annual income level at which the higher tax rate applies, but doesn't it really hurt anyone that people already making at least $10 million/year prioritize making additional income less over other priorities?
I want to encourage people to make insane amounts of money, because that is largely the result of far-and-above productivity which everyone else benefits from. Jobs are created, desirable products/services are generated at affordable costs, money is invested (even banked "cash" gets loaned, and extravagant luxuries create markets), and the general standard of living is raised.
The cost of discouraging effort is never included in these "soak the rich, redistribute the wealth" equations.
Really, if the greatest cost to society you can point to of increasing the top marginal income tax rates is "fewer Ronald Reagan movies", I don't think you are making a very strong case.
> Such rates denied both the public at large from products they wanted, and the government tax revenue.
The case that it denied government net tax revenue requires more than Reagan not making movies, it requires a whole-economy comparison of what activity occurred instead and the actual taxes applied against that activity.
> I want to encourage people to make insane amounts of money, because that is largely the result of far-and-above productivity which everyone else benefits from.
This "trickle down" concept is a widely held article of faith in some parts of the population, but not a position well supported by evidence.
> The cost of discouraging effort is never included in these "soak the rich, redistribute the wealth" equations.
The "cost of discouraging effort" is very hard to empirically establish without ambiguity, and there are sharply different opinions on what it actually is. What proponents think that cost is usually accounted for in where the various parameters are set; people who have different views of what the cost is, obviously, disagree that these settings are correct.
Are you seriously asking why anyone would consider a career in which they are "only" able to keep 27% of any money above $10 million they make in a single year?
You're incredibly out of touch if you don't think most people would kill for that opportunity.
> Would you take up a career where despite long & expensive education, long hours, hard work, and lives-in-your-hands responsibility, you kept just 27% of your income?
Yes I would absolutely do that for the privilege of keeping only 27% of anything more than $10 million a year I make. This is an incredibly good problem to have.
> would you put in a million dollars of effort to net a quarter of that in return?
This is not how marginal tax rates work. Consider putting down Atlas Shrugged and consulting a remedial math textbook.
As I work to make my owns end meet, I'm quite aware of the consequences of having a ~50% tax rate, putting out $X00,000 effort just to net half that.
And yes, I'm quite aware of the technical errors in my presented math. This is a casual forum, not a peer-reviewed paper. What baffles me is how others here won't do the remedial math showing that a 100% tax rate on everything over $1M wouldn't come close to paying for what Bernie et al promise and those here expect as obvious (never mind the always-neglected effect high taxes have on high productivity).
"I want to retire but I'm not going to because I am not willing to lower my standard of living to match what I will earn in retirement."
vs.
"My effective tax rate has increased and I can no longer afford my standard of living. I might as well retire now instead of in 5 years."