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My immediate question is what the innovators do instead of innovating when the tax rate is higher. Taxes reduce income, but they do so monotonically without affecting the relative ordering of options, which is what matters for income-maximizing decision making. The "top" income may be numerically lower, but it remains at the top.



The absolute values do matter. If Jeff Bezos expected Amazon to be much less profitable as it is for him, he may have decided to just stop and retire once it provided enough passive income to let him live comfortably. He would be paid more for the added time and stress of continuing to grow Amazon, as you say, but if that marginal income approaches zero, it just isn't worth it (and we are left without Amazon).


Since this is a claim asserted without basis (nobody can claim to know a counterfactual, let alone someone else's mind), I can also assert the opposite: Bezos didn't get to where he was without having a hell of a drive for success, and that drive is not 100% driven by monetary reward. Prestige, power, influence are all incentives built into us at the biological level, and if he gets to be the all powerful CEO of a $800B company instead of a $1T company, I don't imagine he'd throw in the towel.


I think you underestimate how much welth is used as a proxy to guage prestige, power, and influence amung the super rich.

People with drive don't do it to just be one of millions to reach a given milestone. People with real drive don't enjoy doing something that many before them have done.

Guys like Jeff clearly set out to be the best. Breaking the score bord could very well prevent something like Amazon, and we might have ended up knowing Jeff as the guy who has the largest POG collection.


Ok so he's a guy with insatiable drive, a hunger for success, a need to be the best- aw, hell, tax rates are a bit too high, why not throw in the towel?


No he would use the same talent to minimize taxes. Why would anyone expect otherwise lol ?


I think we need a movement that glorifies the payment of taxes.


I don't buy this, because we're not proposing to only tax Bezos until he has the exact same net worth as Joe Schmoe who collects POGs--this is a straw man. If we tax all the uber-rich 5% more, everyone would be in the exact same position on the leaderboard, just with slightly deflated numbers. We'd be having the conversation about breaking the $1T barrier 12 months down the line, BFD! It's just numbers to the rich, but it's life or death to the poor.

There's a story about a society of peacocks who grew their tails so big and beautiful it started interfering with survival. They'd get it stuck in branches, be too slow to run from predators, etc. No one peacock was willing defect and shorten his tail because he'd lose out on the mating game. If they could all just get together and agree to shorten their tails by 25%, they could keep the relative pecking order and also be agile enough to survive.


The problem with these game theory "let's just all work together" solutions is that they are not stable points. It is in everyone's best interest to undercut the cartel. Even if you did get all the peacocks to shorten their tail, if there is some advantage to having a larger tail, it is irrational to expect noone to try and grow it out again.


You don’t solve the prisoners dilemma by saying “fuck it let’s just all stab each other’s backs”. I’m arguing humanity should cooperate to achieve the better state, and punish defectors if needed to balance the incentives. This at least should be our aim.


Come on, I don't believe Bezos would put on his slippers and retire to a country cottage because tax rates were too high.

While money is certainly an incentive to innovate, it's also not the only incentive (and probably far down the list if you're already rich), and creative, driven people will do what they do whether or not a chunk of their "earnings" gets given/taken back to the society that enables them to do it.


True, but it's not just an incentive, it's also an enabler. SpaceX was on the verge of going broke, and their first successful launch was do or die. Had Musk been taxed more heavily before that, and had substantially less money to pour into the company, they likely would not have survived to make that launch.


But does Amazon provide a large net value? Google I can understand provides a service we didn't have, but amazon just provides "selling stuff" - something that was possible before too. If anything, Amazon now sells tons more stuff using a lot fewer jobs, so what is the net contribution Amazon does to the US economy in terms of job creation, tax revenue, and the Global ecnonomy?

If anything, a lot of the megacorps just seem to kill smaller business while at the same time being better at not paying taxes.


Whilst I sympathise with this view, it does ignore AWS and the value it provides to the businesses that use it, many of whom are SMEs/startups that might have struggled to get going otherwise.


Yes I was considering only Amazon the online store and its value compared to having multiple other/smaller stores - both physical and online.


Efficiency. By using Amazon I save time and can use the time saved to create something of value or to bill more hours or something else that will lead.to more tax revenue.


The net contribution is consumer surplus.


Even if that were true, would that have reduced innovation? How many other innovators has Amazon crushed—fueled by the “top income”?


Taxes may not affect the relative ordering of the (ex-post) outcome of the different options. But they can affect the relative ordering of the (ex-ante) expected value of the different options.




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