ebaycj
Diamond Member
- Mar 9, 2002
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The top tax rate from 1935 to 1965 was over 80%, yet we saw a period of technological advancement unmatched...at least since the initiation of the industrial revolution.
Maybe the high tax rate provoked a "use it or lose it" mentality among the wealthy?
Maybe their companies were more likely to use their many dollars to fund "risky" R&D, leading to said technological innovation, because their alternative was to pay exceptionally high taxes (80%) on those dollars as income. This would be the whole-corporation version of the department manager's dilemma: "I didn't spend my whole budget, so I need to spend it (just for the sake of spending it) before the end of the year (on anything we want, really), otherwise my budget for next year will be cut."
If the alternative is to pay either 80% tax on that money (as income), or pay corporate taxes on that money (as profit), maybe their answer is to re-invest that money in the company by funding experimental stuff that has a small chance of paying out, but if it does pay out, it pays out big.
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