Corporate tax, capital gains tax and inheritance tax all have the side-effect of making people more socialist and less capitalist. What is the rationale?
There are of course two definitions of “capitalist”. Marx’s definition, is the social class which earn their income from accumulated capital. But the definition used in Democracy, is a person with pro-market opinions. These two definitions are not the same.
These taxes should decrease the number of wealthy people, not the number of capitalists.
Try to understand this as a game that simplifies real politics.
I think capitalists are used as investors. If you raise taxes, capitalists will abandon your country because of low margin of benefits.
Additionally, higher taxes reduce people’s money (to buy things).
Why socialists grow? Because they expect State use all these taxes to pay quality public services.
Not only socialists, but every single person expects the State to return tax money to society. Socialists just thinks that State should do much more (expect more presence on society). Increasing taxes shouldn’t increase socialists, but impact negatively on Everyone group (or other specific groups). Even socialists dislikes paying taxes.
I think certain actions should increase socialists, like some grants (note: socialists/capitalists measures doesn’t necessarily will increase or deacrease that population; it’s more likely to upset one and please the other). If government raises taxes but doesn’t spend that money at all, why is the citzen paying? What is he paying for? Thus, raising taxes alone shouldn’t increase any population.
Living in a society that applies taxes on a widespread basis will condition the population to see the government taxing income as ‘the norm’ and this can generally be seen as a socialist ideal (tax & spend) vs the free market.
In a similar way, living in a religious country will encourage people to see a link between church and state as ‘normal’ and living in a country with strict handgun laws will encourage people to see that as normal too.
Put another way, the rationale has nothing to do with the economic impact of taxes, but just the psychological / sociological impact they have to convince people that taxation and redistribution is the normal state of affairs for a society. In this way, people in the UK think the NHS is ‘normal’ whereas people in the USA without it think it’s ‘evil’ or ‘communism’, even if politically they are not that far apart.
You could look at Sweden, as a case study. In 2006, Sweden had OECD:s highest taxes. Taxes have been lowered, since then. Critics say that “the government have given money to the rich”, supposing that the government is the rightful owner of people’s incomes.