Do the Rich Work Less as Their Taxes Increase?
The wealthy, according to the argument, are just like everyone else when it comes to incentives. If you tax their income above a certain rate, they will stop working, stop creating jobs and stop creating wealth that gets spread around the economy. (The term “going Galt” comes from Ayn Rand’s hero in “Atlas Shrugged,” John Galt). Jeffrey Thompson at the University of Massachusetts Amherst Political Economy Research Institute says the “going Galt” argument doesn’t hold up to close research. According to the data, “affluent households are unlikely to make substantial changes in their ‘real’ economic behavior in response to modest tax increases.”
So who do you believe? How much do you think taxes affect the rich behavior in America?
3 comments:
According to the article it seems like the rich don't really work less as their taxes increase. This is because their incomes consist of the work they do and the stocks they own. Hence as taxes increase they just sell off their stocks to avoid paying higher taxes without compromising on their work.
I agree with the above statement. The article seems to point toward the rich moving around assets in order to avoid paying the higher taxes. However, I would argue that this is much different when it comes to lower income people. The rich have a much larger margin to work with when it comes to their funds, low income people however would respond to this disincentive much more aggressively than that of the rich.
I agree with partly with the comments above. It is certainly true that wealthy people have more options when it comes to moving around assets in order to take advantage of tax avoidance. It has been an age old debate: trying to nail the wealthy to end up paying more taxes so the burdens of everyone in the US are closer to equal. I just don't know if it is possible to to that while still practicing the economic system we have in the US. I think the super wealthy will always find a way around bearing the burden that the middle class does.
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