Wednesday, December 12, 2012

The effect of high taxes

Here is why we should worry about taxing the rich:

Entrepreneurship is much lower in Europe, suggesting that high tax rates and poorly designed regulation discourage new business creation. The Economist reports that between 1976 and 2007 only one continental European startup, Norway's Renewable Energy Corporation, achieved a level of success comparable to that of Microsoft, Apple and other U.S. giants making the Financial Times Index of the world's 500 largest companies.

But the article also goes on to note that we are taxing ordinary consumption and labor at near European levels and may soon have European levels of work effort as a consequence. We are also depressing productivity by protecting inefficient producers.

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