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To close this off, a 70% rate, which is what we had pre Reagan for unearned income, is too high. A 50% rate for earned income is pushing it, if local taxes are on top. And distinguishing between earned and unearned income is nefarious ecnomically. It may not reduce revenues, but it does probably distort. But to invoke supply side when we are talking about top rates of 30% to 45% is just silly. There is no evidence that Laffer's napkin comes into play in that zone at all. And arguing for a break for capital gains over other income is even more dubious, although it would, and to the extent it is play does, benefit moi hugely.

But to invoke supply side when we are talking about top rates of 30% to 45% is just silly.

At this point the line between economics and political philosophy gets blurry. Does one find oneself claiming that a tax cut will raise money for the government as per Laffer, while secretly hoping that it dries up the teat on our regulators?

I think I'd put myself in the category of advocating a tax cut with a sincere expectation that it will actually raise money, yet not really caring. We have a lot of unnecessary government.

And arguing for a break for capital gains over other income is even more dubious

I've always understood the argument for a capital gains cut to be more along the lines of it being an effective economic stimulous -- since it would presumably free up capital -- rather than a direct revenue raiser. So, if we are talking about raising revenue, I agree that a capital gains cut would not be as effective as cutting the top brackets and shutting shelters.

To close this off, a 70% rate, which is what we had pre Reagan for unearned income, is too high. A 50% rate for earned income is pushing it, if local taxes are on top. And distinguishing between earned and unearned income is nefarious ecnomically. It may not reduce revenues, but it does probably distort. But to invoke supply side when we are talking about top rates of 30% to 45% is just silly. There is no evidence that Laffer's napkin comes into play in that zone at all. And arguing for a break for capital gains over other income is even more dubious, although it would, and to the extent it is play does, benefit moi hugely.

So, in other words, you believe in the Laffer curve. You just disagree over its exact shape. Earlier you said it was a fraud, and poo pooed it as having first been drawn on a napkin. If you went straight to the point, and did not try to impress upon us your snottiness, this forum would use internet bandwidth much more efficiently.

But to invoke supply side when we are talking about top rates of 30% to 45% is just silly. There is no evidence that Laffer's napkin comes into play in that zone at all.

I would disagree. Immense amounts of effort are expended in Silicon Valley to shelter income and assets in Nevada. Where the Federal brackets fall now for income and capital gains is probably right around the maximum and perhaps a little high. When states like California tack another 10% on top of that, people start to look for tax dodges. People who are perfectly sheltered in Nevada, on the other hand, seem to be far less concerned with the amount of tax they pay. Personally, I find the California tax system egregious, but I can work with the Federal system, no matter how much I detest it. The dozens of well-off friends I have in Silicon Valley agree with me, almost all of whom are sheltered to one extent or another in Nevada. Nevada, in its wisdom, has chosen to reap the benefits of Silicon Valley money indirectly rather than through punitive taxation. As long as California continues its hideous tax system, it will lose revenue through the wholesale sheltering of assets and income in Nevada.

If I had to pull a number out of the air for the maximum aggregate tax rate that will not evoke massive sheltering, it would be around 20-30%. Anything more than this and people will start doing things with their money that will eliminate revenue for the government. And rightly so.