Monday, April 16, 2007

Lower Marginal Tax Rates

Mark Thoma lists a debate between Robert Frank and Greg Mankiw. I must first say that I side with Robert Frank, seeing little Work incentive propelling the Rich because they achieve higher levels of post-tax Take-home pay. One of the elements of the whole discussion which I find revealing is the assumption by All including Mark, which is the suggestion that higher Pay levels equated perfectly with greater Output. I have rarely found this to be the Case, believing Pay scales depended much more on position than on Productivity. It is clear that Pay scales have no relationship with the ability to make correct decisions, as is continually revealed by reportage on Business activity in the News.

We may, for theoretical purposes, adopt the mythical proposition that high Pay enjoys a positive correlation with high Productivity, and still find lack of need for reduced marginal Tax rates on Income. There is even a Case to be made for the economic advantage of assessing a negative Overtime payment (charging higher Income individuals a Wage loss for hours worked over a Standard Workweek of 40 hours), when initial Pay is within the top 10% of Wage-Earners. The later would pressure for the Training of skilled Substitutes above the Norm number for such positions; the practice expanding the level of skilled Labor, and supporting a greater Household expenditure pattern due to more Households with the higher Pay.

There is the elemental advise as well: All Work and no Play makes Jack a dull boy. It also makes Jack a less competent Worker, whether he has the academic credentials or not. There is even a rationale for starting a Second Job or part-time business, if higher Incomes desire to increase their Income; it provides both the capacity for diversion from monotonous daily grind, and the access to fully explore individual talents. The above grants a much greater propellent to economic growth, than does marginal reduction of Taxes at any level above Middle Class Incomes. lgl

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