>>11222434The textbook answer is that ultimately a society or economy is worse off.
Consider the case of where all people in an economy must choose between leisure, and the labor nessesary for a desired level of consumption. If income is taxed, or increases, in theory theres disincentive to work or pay more taxes in general (the substitution effect). The decrease of income however, arguably creates an incentive to increase income in some way to achieve the same level of consumption. In theory the effects are ambigious. Ultimately output or GDP is lowered if the Government is not spending revenue collected. Production Possibility Frontier is reduced for society. Im pretty sure this is how the story goes as I recall. Lets bring this back into context of the wealthy portion of society:
This goes a little beyond what Ive been taught, but it makes sense to me in theory when you think about it, the wealthy can more easily subsitute how they can attain forms of *income*, than the less wealthy. This can be due to multiple factors like education, training, skills, but in general the greater amount of wealth one has, the greater ability they have in substituting forms of income, not nessesarily capital gains or typical financial products. Think about some basic examples:
If you are poor and uneducated, you can do very little, you dont have many substitutes in forms of income and labor, you can hit a hammer on a nail and thats about it.
If you are wealthy and educated you can invent all sorts of way to create forms of income. Sure there are financial services, but thats sort of normie tier, a good example of a unique income substitute would be bitcoin trading. Its most often something on the edge of development in technology. Or more realistically you hire tax experts to move around the income and wealth you make.
