How do you know when taxes are too high?

In an ideal economic environment people and companies could build, buy, hire, fire, produce and sell without having to think about taxes. But that's not the case in the U.S., and maybe if there were serious tax reform with a repeal of the current income tax code and an adoption of a flat tax or sales tax we might get there.

For an example of how taxes affect decisions, see the very interesting article titled How Taxes Changed Boxing at TheAtlantic.com. The 1964 Tax Reform Act dropped the top rate from 90% to 70%. Prior to that, top boxers would fight only one fight a year, because even though they might earn a huge purse, the take home pay was minimal. Article excerpt:

Then, the Tax Reform Act of 1964 cut the top marginal tax rate to 70 percent effective in 1965. The result: two heavyweight title fights in 1965, and five in 1966."

It's a pretty good example of how taxes affected behavior.