Posted by gomiami1972 on 5/27/2018 6:15:00 PM (view original):
Sorry, bad_luck, I wasn't ignoring you. By creating a hard cap on income, you create a hard cap on motivation to achieve (for most.) We live in a money economy. Only a saint would continue to reach upward once they reach that $10M level.
Most of us are not saints. What you propose is a great utopian ideal. In reality, it would breed retardation and mediocrity.
It doesn’t create a cap on motivation. $10m is an unbelievably large amount of money. Anyone starting a business would be happy to personally make $10m once, let alone more than $10m annually.
In reality, it would create an incentive to reinvest. We know, for a fact, that cutting upper income tax rates doesn’t encourage owners to reinvest the money back into the business.
But if, for example, you’re a business owner and you project $12m in personal income for a year, you have a choice. You can hang on to the additional $20k and give an extra $1.98m to the feds or you can put that entire $2m back into the company—pay your employees more, buy new equipment, etc. The tax caps the amount large shareholders can extract from the business.