I'm creating a developed country where due to tax reasons affluent have more children then the lower classes. The marginal tax rate is very high 80% and there are no legal loopholes to avoid paying taxes. Foreigners including foreign companies are not allowed to own assets in the country. The citizens could legally move their wealth abroad only by selling their assets and emigrating for good.
The rich people who stay in the country have on average more children then the lower classes.
Would higher fecundity of the rich crowd out the economic opportunity for the children born in the lower classes?
An extreme example is Saudi Arabia, where the number of royal princes—around 7,000—is so large that they crowd out mere commoners from officialdom. economist
Example how marginal tax system works.
The sizes of the brackets are for illustration purpose only.
- 0-10,000 -> 0%
- 10-20,000 -> 10%
- 20-40,000 -> 20%
- 40-80,000 -> 40%
- 80-... -> 80%
For example a family that earns 300,000 per year, would have tax base of 150,000 if they don't have any children (300,000 / 2), or 50,000 (300,000 / 6) if they have 4 children.
The family without children would pay:
(1,000 + 4,000 + 16,000+ 56,000) X 2 = 77,000 x 2 = 144,000
The family with 4 children would pay:
(1,000 + 4,000+ 4,000) X 6 = 9,000 X 6 = 54,000