It would work on killing any motivation I might have to make money.
If ohaideredevs is in such a place that he's able to stop working and not have to worry about being able to pay for housing, food, clothes, insurance, and all the other necessities of daily life, then that's great for him, but I guarantee you absolutely that the vast majority of the people in America would neither stop trying to make money, nor stop trying to make more money, just because some taxes went up. More money—even if a higher percentage of it would go to the government—just makes too much of a difference in the day-to-day life of most people for those kinds of concerns to be anywhere near strong enough to make it look unappealing.
So if someone who already has so much money that they don't need to work another day in their life stops trying to make money...or even if it's someone who makes so much that making more wouldn't reduce their stress in daily life no longer trying to increase their income...I don't think that's a net loss to us in any meaningful way.
> Our research on eighteen OECD countries shows that, between 1975 and 2008, there was indeed a strong correlation between reductions in top tax rates and increases in top 1 percent pre-tax income shares... higher top tax rates may discourage work effort... the incentives for [executive] rent-seeking are much stronger when top tax rates are low
> there has been no correlation between cuts in top tax rates and average annual real GDP-per-capita growth
Piketty wants to reduce inequality without damaging the economy, not specifically boost tax revenue from the rich. His claim is that raising top tax rates does discourage people from obtaining extremely high pre-tax incomes, but doesn't shrink the economy. There are several possible reasons for that, but the basic question Piketty cares about is whether you would stop being productive. Someone who trades off salary for a shorter commute, or spends less time angling for a raise, or even hides their money from taxes more effectively, is not necessarily producing less value.
If you lost your motivation to seek more than $500,000/year (remember, this is about the top bracket), but continued to do equally GDP-boosting work elsewhere, that counts as success for this system.
People love things, power, sex and connection. Most of the things that lead to those things are exchanged directly or indirectly for money.
You’ll almost certainly always find a personal narrative as to why you want money.
Unless you're already making that much, how does a higher marginal tax rate on income over $500k affect you at all?
Raising taxes on those already making that much makes it more likely, not less likely, that you will be able to do so.
So, if you want to make that much some day, then it would affect you when you do.
Further - raising rates on high income earners makes it more likely for others to make more? That seems dubious.
Decreasing rent-seeking in top earners will leave more money on the table for everyone else.
Sloppy methodology with a conclusion in search of evidence.
Okay. So what?
We're on the ycombinator website, presumably the concept of stock options is not foreign to those here. Taking less salary for years with the potential for an IPO is a lot less lucrative when your payout goes down by 50% due to taxes.
Since we're talking about an increase in the top marginal income tax rates, sacrificing regular income for a chance of a big capital gains payout would actually be more, not less attractive, unless this was pared with treating capital gains as normal income—and even then, would probably remain more attractive if also coupled to provisions allowing spreading income spikes (whether due to one-time capital events or otherwise) out via advance and/or deferred recognition options, which is probably necessary for basic fairness if capital gains are treated as regular income—and actually that helps with fairness for some regular income patterns as well.
So if by "a lot less lucrative" you meant "13% less lucrative," then okay.
In the past a lot of people have claimed they’d be demotivated about raising taxes, but it’s never stopped someone from being richer. More is still more, even if the government takes a greater share.
That you could finally relax and spend time doing things of value to you instead of acquiring wealth?
Sounds good to me.
That's probably not true of most of the people dedicated enough to making money that they'd be subject to it in the first place, but to the extent it is, that's probably not a social problem; the rich maximizing their own income isn't always socially optimal.
Furthermore, your ability to make millions is only possible because of the services provided by government (education, infrastructure, security, financial regulation).
Plenty of people are motivated by much smaller numbers. The average take-home of the top 1% is between $400k and $700k. We're talking about a bigger tax on the 0.1% (>$1M/yr), and a huge tax on the 0.01% (>8M/yr). Again, those brackets are only able to achieve outsized returns because they have educated workers and a stable legal/regulatory system. Because they achieve outsized benefit, they should pay a proportionally higher share.
If those amounts are enough to incentivize 99.99% of the country, and you're still making more than they are, I'm sure you'll survive. If not, someone else will take your place.