"Ignoramus16474" wrote in message
...
Some people seem to believe that with more taxes, people will tend to
work less and businesses will hire less.

This view is, at best, simplistic, and at worst, less than sincere.

I would like to point out that it is much more complicated than that
and effects of taxation, outside of extremes like 100% taxes, are not
nearly as obvious.

Here's an example.

Let's say that a worker earns 100 dollars per hour. Let's say that
presently he is taxed at 30%, so his actual cash income is $70 per
hour.

This worker certain needs, such as a mortgage, a car loan, a kept
mistress on the side, and a hobby workshop.

Suddenly the taxes increase and instead of 30%, the government takes
40%, so the worker's cash income falls from 70 dollars an hour to 60
dollars an hour.

Would this worker choose to work more hours, to maintain his
previous lifestyle, or less hours, due to being discouraged?

The answer is not at all a given and depends on the worker's utility
curve, specifically the utility of free time and the marginal utility
of the extra goods that he can no longer afford due to higher taxes,
as well as how elastic his expenses are. This hypothetical worker
probably cannot pay less mortgage, but perhaps he can reduce the
presents to the mistress.

As everyone's financial and leisure priorities are different, the
result of higher taxes on the total hours worked, likely would involve
a mix of work reductions and work increases.

This obvious consideration was pointed out to me at the University of
Chicago business school, approximately 12 years ago.

i

From a different point of view, consider the effect of taxing the business
that provides that $100/hr job. Can the business expend capital (risk) to
expand and hire more $100 workers? Or, buy new equipment built by companies
that hire other $100/hr workers? With more capital going into the
bottomless pit of government, there is less capital available to hire people
and buy equipment. Less money in the whole system means less presents for
mistresses, less demand for all sorts of goods which leads to less
production and less jobs.

In my little world, my accounts are in great shape, I'm lucky enough to be
almost recession proof. BUT, I'm not risking ANYTHING! The standing order
is not to buy anything we don't absolutely have to have and watch every
penny. No landscaping projects, no new lunchroom furniture, no new
computers, no luxuries!

These are uncertain times, the health care fiasco, the cap-n-tax scam, and
the massive spending of this administration frighten the hell out of
me...why should I risk? I will just hunker down and wait for the end of
this administration. And, if I don't risk, the landscapers, computer
makers, furniture makers and luxury makers LAY PEOPLE OFF!!! It's not just
me, it's most small business owners in general feel the same way. No mater
what the liberals say, it won't change this. PLEASE, TELL ME YOU GET IT!