ybe is 40% so you pay $40,000 in taxes. Your income is 10 times higher, but your tax burden is 40 times higher. Now this system is an outrage on its face, and according to Rand it has never been justified in anything short of total egalitarian level down and destroy the rich. (622) The effect is also bad for economic growth because a progressive tax takes more money from people with higher incomes. People with higher incomes save more, and that means that the amount of money that is diverted from savings to consumption through the government is going to be greater with a progressive tax. That’s what this represents. Whatever the numbers the progressive tax is worse for saving than a proportional tax. I should make it clear I made this number up, I don’t know what the right number would be here, I don’t think anybody knows, I don’t know how it would be possible to find out. “It would be impossible for even the cleverest statistician to know”(Hazlitt 78) All I can say is that clearly a progressive tax is worse for economic growth than a proportional tax. The corporate profits tax.Table 10The corporate tax structure in the United States is more complicated than the individual tax structure. It goes up to from 15% to 39% as a top bracket; then, after that it goes down again to 35% on any profits over approximately 18 million dollars. Now corporate profits are divided into two parts. One part is retained earnings and the other part is dividends. So those are the two things a corporation can do with its profits. The corporation can either retain the profit, or reinvest in the business or it can pay all or a portion of the profit out as dividend to its stockholders. If the corporation pays does decide to pay out profits as a dividend to its stockholders those stockholders are typically among the more wealthy individuals of the population; they’ll save some portion of the dividends they receive. I’...
