Earlier quoted context omitted.
>I knew there was some criticism of SimCity's simplified tax model in the U.S. some years ago (a simple inverse relationship between tax rates and business growth) Isn't that pretty much accurate? I'm not aware of any serious theory postulating that raising taxes will have any non-negative effect on economic growth in and of itself. Where it breaks down is once you account for what the tax dollars buy. If government…
Frankly, it's clear you have very much a microeconomics-based of the macroeconomy, all accounting identities and no feedback. To begin with, there has been made the case that progressive taxation does, mostly, not mean a significant negative behavioral response in production. That is, taxes can in practice be increased a lot until the rich start fantasizing about going Galt. [D&S] estimate the optimal tax rate, for m…
[1] http://www.reuters.com/article/2013/04/13/us-obama-taxes-idU...