It’s not fair that I should pay 30% tax on my minimum wage part-time Algebra tutoring job just because my software internship earlier in the year had a high salary. And yes, it did serve as a disincentive to work and I quit that job and the students had to make do with what I assume was a marginally worse tutor at the same price.
Similarly it’s unfair that if I do a three month software contract and then go off to Mexico to surf for the rest of the year, I pay the same low tax rate as someone who works hard all year to make the same amount and has to pay high cost of living in the US the entire time.
Investments that produce positive returns are the primary mechanism by which productivity increases. Productivity gains explain almost all of the rise in standard of living experienced throughout human existence.
Centrally planned economies don't make these considerations and languish in productivity as a result.
The wealth generated should go to the investor who earned it.
>>or even automate rich people out of their jobs.
Go right ahead. Any automated tool you create that can effectively identify investment opportunities would be a enormous boon to humanity.
What you'll find as you grow more familiar with how an economy works is that investment is a dynamic, ever-changing process, and individual initiative and enterprise is always necessary to make it happen.
Many people make the mistake you're making now, of taking for granted the process of managing and allocating capital, because they don't understand how enormously complex the task is.
As for efficiency, you're overestimating how efficient political establishments can be in comparison. Just because a plan calls for the government to act efficiently, in the interest of the public, doesn't mean that this is what actually happens.
All of the tendencies toward waste and corruption seen in the market are manifested in politically appointed institutions as well. Private sector investment has been demonstrated to be the best way to increase productivity, and to be far more effective than politically directed management of economic assets.
All the people that go on about incentive and the open market amaze me when they claim that it's a disincentive for people to work when you lose say, 50% over some high amount.
Once you have a ton of wealth, it just becomes relatively worthless to you. People with a ton of wealth don't add (significant) value except by providing that wealth to others, which then nets them even more.
We should be trying to limit the ability to just continually accrue wealth. At some point it stops serving society for an individual to have more. The incentive is gone - no one is not going to try because if they are so successful they earn over $10m say, they will not get any more.