What if your model takes into account the fact that if income taxes are high enough, startups stop happening? These economists tried it, and found the optimal tax rate is 29%. https://www8.gsb.columbia.edu/faculty-research/sites/faculty-research/files/finance/Macro%20Workshop/toptax.pdf …
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Replying to @paulg
When marginal tax rates were higher, the US put men on the moon, designed atomic bombs, commercial jets, ARPANet, the credit card, the transistor, communications satellites, LEDs, Hypertext, CDs. Technical innovation was financed more by the state/military vs private investors.
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Replying to @kimmaicutler @paulg
Cold War was a not so little motivating factor for all the examples you give.
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War has historically been a motivation for high taxation rates.https://www.cambridge.org/core/journals/international-organization/article/conscription-of-wealth-mass-warfare-and-the-demand-for-progressive-taxation/14C10D9E21A194E7AC57971043C4EB0C …
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Replying to @kimmaicutler @paulg
Perhaps this is the real problem, the US has financed the global security umbrella for longer than it should have. In the post Cold War era other developed countries could have & should have done more. Especially considering the US’ post WWII reconstruction efforts.
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Lower defense spending could have allowed for greater capacity for spending in other areas such as healthcare, etc.
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That happens to also be the president’s argument but yes.
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As a non-security/non-military person, I have no idea how to calculate the optimal spending level the US should maintain on global security.
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Replying to @kimmaicutler @paulg
Would be keen to read academic studies on this if any exist.
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