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Comment by CiaranMcNulty | Hacker News Reader

Progressive income tax retains the property that the higher your salary is, the more you take home

But there are diminishing returns which is not exactly motivating. The way to think about it is, imagine you would work 20% harder, but instead of 20% extra take home money you only get 10%. And it gets more skewed progressively which discourages trying hard at some point. People just stop trying as they don't see the reward as good enough for working harder.

Evidence doesn't seem to suggest that higher earners "stop trying", but above a surprisingly low threshold it's cheaper to pay someone to organise your tax affairs for you and move your money through various loopholes to (legally) avoid paying taxes.

Any government plans to "tax the rich" end up hitting the people just below this threshold the hardest (usually small business owners) while multimillionaire corporate CEOs with various offshore holding companies continue to not pay their fair share.

Ok but that kind of proves my point. They are avoiding taxes and using loopholes and tax havens precisely because it is unfair that their tax rate is increasing the more they earn. At least they feel it’s unfair to them. Why not solve the problem by having a simple flat tax? Everybody pays the same amount, let’s say 20%. Then it becomes much easier to come after tax dodgers on moral grounds. They no longer have an excuse of them being unfairly treated as their tax is identical to everybody else.

> At least they feel it’s unfair to them.

and yet you have people like Buffett and Gates who say the exact opposite that they should be taxed more. So who is right the other rich people complaining about taxes or Buffett/Gates saying they want more taxes?

'At some point.'

You're verbally describing the Laffer curve. Do you think they're on the right hand side?

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