LOL @ your taxrates not giving incentives to work more.

Swedish marginal tax on high incomes (not that high 60 KUSD or soomething) is 55-60% depending on what city you live in, i.e., you get to keep less than half of what you make above that level. On lower incomes you pay some 30%.

Now there are a lot of people complaining about that here in Sweden (the ones making more money, obv) but you still see a lot of people striving to make more money.

So personally I do not think the argument that it takes away the incentive holds. The argument should more be on what is "fair" that each person contributes with. Is it fair that the "high" income people pay that much more/take that much of the tax burden?

I think the Swedish levels are stupid, and they give a very high incentive to earn black money, cheat on your tax returns, move money abroad etc. But from my experience is not stopping people from earning more.

you are baiscally taking a 30% pay cut when you go past a certain level. That has to keep some people from going after extra projects or extra hours.


But I agree with your point that compared to Europe the US doesn't have much room for complaint when it comes to marginal income tax rates. In the US I think the top rate is 34% or so now.

There is no point in the U.S. where you are taking a big pay cut for moving up a tax bracket. There are small bands of income where you will take home just a bit more if your salary is just a bit less. We're talking hundreds of dollars over the course of a year here, not tens of thousands.

Beavis, that math makes no sense at all and I have no clue what you're trying to say.

I get $90 = 90% of $100.

But what on earth is that $65 figure?? What are you saying? No matter what I do to try to figure out your thoughts, I can't get anything to come out to $65.

...........

Let's say you have the following goal: I want to retire when I reach $X in the bank (say $1 million, or $2 million, or whatever). That's enough cash, you say to yourself, to keep up a lifetyle that I will enjoy and never have to worry about money again.

If that's your goal (and it seems pretty realistic -- a lot of people have similar goals), then every time your taxes are increased, you would work more. You'd either work longer hours, or more years, or whatever, but you would work more, in order to reach your retirement goal.

Alternatively, let's say that your goal in life is to have a house just a little bit bigger, and vacations just a little bit nicer, and a car a little bit newer, than your siblings / parents / former frat brothers / drinking buddies / whoever. You're all in this semi-declared competition together. If that's your most important motivation to make money (and again, for a lot of people it is), then increasing income tax rates will have no effect on how much you work. Everybody in your group will be equally affected by tax policy, whatever that policy may be.

I understand not liking taxes ... and I understand that Economics 101 says that anytime you tax something you get less of it ... but it seems like basic human nature may resist the conclusion that more taxes on work necessarily leads to less work.\

.....

Note, I'm not saying anything against any particular "fair tax" scheme. For a variety of reasons I'm not exactly a huge fan of the current tax structure, either!