Perhaps it's easier to say they remove the incentive to excel where you are.
Do high taxes really remove the incentive to excel? I'm really not convinced that they do.
Not that I'll ever earn enough for it to be an issue, but it certainly doesn't put me off - the chance to actually excel in something is incentive enough, the money is a bonus but not everything.
Say taxes are 25% below £100k and 75% above (for instance). You earn £100k, pay £25k in tax. You have a choice to a) stay in your job, b) work harder for £250k, or c) work harder in another country for £250k, but where the top tax rate is 50%.
b), where you work harder and move from net earnings of £75k to net earnings of £118k despite your salary more than doubling, is obviously not the one you'll opt for.
Factor in the fact that the people who pay this top rate of tax are also generally the most mobile, and the Government runs the risk of you leaving, and their tax revenue going from £25k to £0k, which is what we're seeing in France right now.
Edit: Oh yeah, also factor in that the people this applies to (and thus the potential tax revenue increase for the Government) contribute an irrelevent amount in real terms, and there is literally no benefit to doing it other than punishing people for their success. It's the Blue Shell of tax policies
Edited by LeoliansBro at 14:55:52 02-01-2013