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  • #2
    All well and good provided there are no shocks to the economy.

    Notice the drop in tax rates for the rich in the 70s. What was the shock then ? it was the oil crisis.

    To get the rich to continue investing there had to be incentives. Those incentives remained into the 80s and beyond as the rich managed to keep it that way. Now the tide is slowly turning in the opposite direction.

    But that will only last until the next shock where the rates for the rich will predictably fall again.

    The other point is a country has to attract & retain capital. In the absence of capital controls, money will leave the country to whatever destination offers better returns. It capital controls are instituted it will still leave, just that this time it will be via the black channel.

    Money goes to wherever it attracts the higher return. If countries want to attract & retain capital there have to be incentives to keep that capital there. Not compulsions imposed by govt which are counter-productive. Again this leads to lower rates for the rich.

    Why is the american tax code the most complicated in the world ?

    Supposedly running into tens of thousands of pages. Its riddled with loopholes to retain capital.
    Last edited by Double Edge; 18 May 12,, 13:58.

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    • #3
      the problem with higher tax rates for the rich is that they justify higher marginal rates for everyone. In the end after government jacks up taxes on 1% they do so for the other 99% as well.

      "bracket creep" is always there.

      Second the 'omnicient' and 'efficient' government spending and investment hypothesis is similar to the square earth one. Most money goes to pensions and useless white elephant projects that are over oversold to the public as infrastructure for their benefit and then defrauded over and over again.
      Originally from Sochi, Russia.

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      • #4
        Originally posted by cyppok View Post
        Second the 'omnicient' and 'efficient' government spending and investment hypothesis is similar to the square earth one.


        That's the main flaw in the thesis.

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