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Ok, so we can now get to how can tax rates cause hording or other bad for economy behavior.
So lets start with the high end. Suppose the tax rate is 100%. (Or 105% like the UK had as a marginal tax rate!)
So you are going to run a business. And all your profit is going to be taken in taxes. Or you are going to own rental property, but all the excess above expenses is going to taken as taxes. Or you are going to buy bonds issued by companies that make products, but all the interest is going to be taken as taxes.
What happens? You say "screw it" and stop doing the business, or renting the house or buying the bonds. This sort of taxation tends to make people very nervous, so you will probably take the money and quietly put it mason jars in the backyard, and spend it as you need it go get by. People do economic activity because they expect to make a return. Essentially the return is the rent on the consumption forgone now. When people stop doing economic activity, the economy will not have effort being put into it and it will lug down like East Germany did. Eventually you shortages of razor blades and long lines for everything.
So let's back the tax down a bit. Let's make it 80%. At that level, some economic activity will take place. There are some things that are so profitable that even when you only get to keep 20% of the profits they are still worth doing. But not that many. The economy still grows very slowly if it grows at all.
We can keep dropping the tax rate and we find that at each lower increment, there is are projects that were not worth doing at the higher rate that are now worth doing. Economic activity always increases when the tax rate is dropped, although the change is not as much as the tax rates get very low.
A lot of different tax rates have been tried. The UK tried very high personal rates and corporate rates of 50% after WWII. The economy limped for 30 years. (I think the UK was the last western country to still have food rationing, which only ended in 1954, nine years after the end of the war!)
It looks like 35% is about the top corporate rate that doesn't start to slow the economy down. Various personal rates have been tried. Something less than a 50% marginal rate seems to be the useful top. And you always want to tax dividends and long term capital gains at a lower rate to encourage people to forgo consumption today so that the economy can grow.
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