Taxing Matters: Why Do Americans Work More Than Europeans? -- It's not cultural differences

Wall Street Journal ^ | October 21, 2004 | EDWARD C. PRESCOTT

[OESY]

...What does this mean for U.S. tax policy? It means that we should stop focusing our attention on the recent tax cuts and, instead, start thinking about tax rates. And that means that we should roll back the 1993 tax rate increases and re-establish those from the 1986 Tax Reform Act. Just as they did in the late 1980s, and just as they would in Europe, these lower rates would increase the labor supply, output would grow and tax revenues would increase....

Some say that the 1993 tax-rate hike was responsible for erasing this country's debt problems because it increased government revenues. This is false. The ratio of U.S. debt to gross national income continued to increase in the years following those rate hikes and did not fall until the fortuitous boom that occurred in the late '90s....

Also, we need to get away from thinking of the rich as some sort of permanent class. Many of the individuals who show up on annual millionaire lists, for example, are people who happened to have a good year and who may never appear on that list again. Consider people who worked hard for many years and built a successful business that finally goes public. The big capital gain they realize that year is really compensation for the uncompensated effort they put into building the business. They should not be penalized for their vision and tenacity. If we establish rules that punish the winners, entrepreneurs will take fewer risks and we will have less innovation, less output, less job growth. The whole economy suffers under such a scenario.... And this doesn't just involve the Googles and Apples and Microsofts, but countless other companies that start small and end up making large contributions to the economy....

[OESY]

Mr. Prescott is co-winner of the 2004 Nobel Prize in Economics, senior monetary adviser at the Federal Reserve Bank of Minneapolis and professor of economics at Arizona State University.

[yoe]

"If we establish rules that punish the winners, entrepreneurs will take fewer risks and we will have less innovation, less output, less job growth."....as in cradle to grave entitlements and higher taxes? Why work hard when Uncle will give it to you...a Kerry form of government control over the people.

[no more apples]

I don't have access to the rest of the article, but I like what I've read so far. I would really like to see a huge overhaul done to our tax system.

[EQAndyBuzz]

""If we establish rules that punish the winners, entrepreneurs will take fewer risks and we will have less innovation, less output, less job growth."....as in cradle to grave entitlements and higher taxes? Why work hard when Uncle will give it to you...a Kerry form of government control over the people."

I call this aspiring to mediocrity. Why work hard when all is provided for you? Socialism caused this. This is no suprise. When a nation promotes the freedom of the individual to achieve whatever it is he/she wants, then productivity and income rises. When there is no motivation to do anything because regardless of effort you will earn the same, then income falls as does corporate revenue.

[Fenris6]

Why Do Americans Work More Than Europeans?

Because we have been paying for European security.

We should bill them. They obvioulsy have too much idle time on their hands - what with stealing aid money from Iraqi children and hosting cocktail parties at the UN while Sudan is exterminated.