Interesting research, nice write up of it. Personally I am not a fan of tax rates of 50%+, they seem to shift the focus from "do more" to "do enough", or to "minimise tax take".
I think we need to take care in interpreting the findings.
Fair to say they apply to workers with limited fixed outgoings in solitary low status drudgery jobs.
It is less clear that they apply to
- those with high fixed outgoings eg bills, rent, children - where higher tax takes may cause workers to work longer hours out of sheer necessity - giffen type responses to high taxes
- those in jobs which they really enjoy or where they become more enjoyable if you do more
- those in jobs that confer status and other non monetary extrinsic rewards
- those in jobs where a bit of hard work gets you promoted to a much more rewarding (/fun /high status) role, or where working fewer hours may stall your career or get you demoted.
- large companies, which are not sentient beings and do not have the same range of alternative uses of their time and energy when faced with high taxes / evasion options.
I expect that part of the improvment is due to the chance of ebing caught. If this is lower than 50%, i.e. the governmetn is less efficient in discover tax evasion, the trade off is worse
Reminds me of the laffer curve, but can macro conclusions really be drawn from micro preferences? Also transfer mispricing and other creative accounting can shift significant foreign currency out of entire countries.
Agreed. Fairness is important to us. Any option to evade taxes needs to be offered equally to all.
yep. And there is a good reason that economists almost never make it in politics.
(We'll see how that crazy guy in Argentina fares).
Interesting research, nice write up of it. Personally I am not a fan of tax rates of 50%+, they seem to shift the focus from "do more" to "do enough", or to "minimise tax take".
I think we need to take care in interpreting the findings.
Fair to say they apply to workers with limited fixed outgoings in solitary low status drudgery jobs.
It is less clear that they apply to
- those with high fixed outgoings eg bills, rent, children - where higher tax takes may cause workers to work longer hours out of sheer necessity - giffen type responses to high taxes
- those in jobs which they really enjoy or where they become more enjoyable if you do more
- those in jobs that confer status and other non monetary extrinsic rewards
- those in jobs where a bit of hard work gets you promoted to a much more rewarding (/fun /high status) role, or where working fewer hours may stall your career or get you demoted.
- large companies, which are not sentient beings and do not have the same range of alternative uses of their time and energy when faced with high taxes / evasion options.
This is an argument for lowering the general tax rate, supportive of the diminishing returns 'Laffer Curve' model
I expect that part of the improvment is due to the chance of ebing caught. If this is lower than 50%, i.e. the governmetn is less efficient in discover tax evasion, the trade off is worse
Reminds me of the laffer curve, but can macro conclusions really be drawn from micro preferences? Also transfer mispricing and other creative accounting can shift significant foreign currency out of entire countries.