As the marginal tax rate rises higher and higher, levels of productivity (and of creativity) begin to approach those of slave labor. Indeed, at a marginal rate of 100%, production rates would become inferior to those realized by slaves, since slaves may be penalized for failure to produce, while no comparable system of punishment is normally instituted against nonproductive taxpayers. By way of comparison, Americans pay approximately 33.8% of their income (as of 2000) in federal, state, and local taxes (
). The marginal tax rate undoubtedly runs considerably higher. If tax rates are increased ex post facto, as happened in the United States in 1994, then past production is of course unaffected. The legal precedent of such a policy, however, signals all producers that in the future the fruits of their efforts may again be taken away from them without notice. Such a policy therefore diminishes productivity and prosperity indefinitely.
The burden of taxation includes not only revenue taken from producers, but also additional tax-accounting costs, incurred by virtually all workers and businesses, as well as by the government's own revenue agency. The accounting and enforcement costs of a revenue agency, such as the Internal Revenue Service, diminish the effective revenue obtained by the taxation policy, in the same manner as overseeing costs diminish the slave owner's profits. Accounting costs imposed on workers and businesses (both in time and money) are a further disincentive to production. Furthermore, insofar as producers make decisions based on tax consequences or on the relative tax-accounting costs of various alternatives, market processes are no longer directed toward the most efficient satisfaction of consumer wants, as they were in the free market (p. 4.8:28). 
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