John Lott and David Reiffen (1986) argue that our explanation of socialism is both inconsistent with rational behavior on the part of government leaders and empirically unsupported. They also assert that our revenuemaximizing inframarginal taxes are incorrectly specified. We feel that their comments are a result of a misreading of our paper (1984). Our primary concern was with the capture of the inframarginal rents of labor suppliers, rather than the return on capital. Labor returns in a capitalistic society typically comprise 70 to 80 percent of income, and are therefore a potentially large source of governmental wealth. Although in framing our argument in a way consistent with Brennan and Buchanan's (1980) framework we choose to evaluate alternative tax regimes, such taxes actually take the form of a governmental labor monopsony. All firms are nationalized and workers become government employees. By choosing wages which just cover substance, governmental 'profits' are increased by what would be workers' 'rent' in a capitalistic economy. Although 'substance' may vary from worker to worker, the government would not know this variation and wages would realistically be set at a level sufficient to draw most of the population into the work force. Any variation in wages seen would reflect not differences in productivity in the usual sense, but rather differing political 'pay-offs' according to the worker's service towards maintaining the political regime, or conversely, his potential to disrupt it. The resulting wage structure would be independent of economic productivity, and the government would have to rely on some form of directed labor allocation. The resulting economy would correspond to the Soviet model of communism, with a total elimination of non-governmental employment opportunities. In Western European countries socialism does not appear to be motivated by the desire to maximize governmental revenue, but rather as part of an attempt to achieve employment or other political goals. The existence of a private sector economy of a significant size precludes the exercise of monopsony power in the labor market. (It is interesting to note that these Western 'socialized' economies do not prohibit out-migration. Coun-