But after a certain point, incentives become meaningless. There's no qualitative difference between the lifestyle of somebody worth 50 million dollars and somebody worth 150 million dollars - they can both afford almost anything they want. Unless you're extremely, extremely poor at financial management, after a certain level of income its almost impossible to spend all your money anyway.
After that point of enormous financial security is reached, money is just a lousy way to keep score.
My point is: "incentives" aren't really meaningful after a certain level of compensation is reached. You see this all the time with those fortune 500 CEOs taking pay cuts to 1$ a year until their company starts doing well - their salary doesn't matter to them, they're so rich that this level of compensation is paltry and meaningless to them anyway.
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Fun fact: A lot of people like talking about the "golden age of manufacturing" - which started in the 1940s, as the US had to gear up for world war 2, and ramped up government spending to a level beyond all reason. One thing they don't often mention is that the marginal tax rate on the highest income bracket during this period was 90%. Literally, if you made income in the highest bracket, 90% of your earnings went to the government.
The government then spent ALL of this money on factories, infrastructure, manufacturing, and the military - one of the big reasons all these factories and manufacturing jobs went away, aside from cheaper costs elsewhere, is because the government contracts that made them so profitable have disappeared. This caused an enormous recovery effect on the US economy that was in shambles from the great depression, and caused them to multiply both productivity and GDP per capita by several times. It also rapidly reversed the spiraling deflation of the US currency - the more the prices dropped, the harder it was for businesses to get money to pay their employees.
Reagan did indeed cut taxes to generate economic growth - but he cut them to a 70% marginal tax rate on the richest bracket. Now the richest bracket in the US pays something like 45%, and is going to receive an even bigger tax cut once Trump is done. It should surprise no one that jobs for blue collar workers are rapidly disappearing - the money that once sustained these jobs is now going back to the pockets of the rich instead..
Edited 1 time(s). Last edit at 01/27/2017 08:23AM by vortexmagus.
