<p>"You don't believe changes in income tax affects productivity? Do you not believe in the concept of incentives?"</p>
<p>Rational people don't "believe" in an idea such as incentives. Instead, they examine evidence to see how they operate in the real world. Only ideologues believe in concepts without examining evidence.</p>
<p>Of course, incentives are a driver of human behavior, although as with most human behavior, how much they matter can be answered by: yes, but it depends on many factors when and by how much. Try reading the journals filled with articles by PhD economists (especially the recent work in behavioral economics, a field in which its practitioners have won Nobel prizes in Econ) and you will find many empirical studies on the impact of incentives in many areas of life and under varied conditions. The use of social/cognitive psych along with economics has yielded some very interesting findings! Some of that work is reported in the bestseller, Freakonomics.</p>
<p>In any case, incentives are not the issue at at hand. You said that productivity increases are linked to tax policy, but you have yet to provide any evidence that this is so.</p>
<p>Asking me what would happen in a situation that does not exist in the real world is not reality-based research, so I see no reason to respond to your hypothetical. (See my discussion of counterfactuals, above.) No one would adopt the policy that you suggest and, in any case, even if you could determine the effect of extreme policies, this wouldn't tell you much about policies which are much less extreme.</p>