with WORSE outcomes, too, let’s not forget that. Maybe my dad wouldn’t have been dead at 60 if he’d caught his cancer earlier, but hey, who can afford regular check ups on a fixed income.
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When I was a kid, just learning about things political, I remember finding out that tax rates could be ridiculously high (early sixties). Seemingly. On the face of it, it just seemed wrong, but no one could explain to me why it was that way other than that was the way it was. Obviously, I had no clue as to what either progressive or marginal taxes were. Most people now seem as clueless as I was then.
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It was the best I could find. I’d love to see other comparisons at this level of detail to compare.
That will be just as confusing for most Americans. And a flat tax tends more toward the regressive despite the deductibles.
The current progressive marginal tax rate system could be laid out on the GOP’s famously stupid postcard just as (if not more) easily than a flat-tax scheme. The key to that goal is eliminating a lot of deductions or (as it turns out) offloading them onto other forms.
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Yes, for no other reason than it involves math. The current system has tables you can look everything up in.
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Okay. Let us know what you find.
I just think it’s important to recognize bias on articles like that, since they are a group that opposed taxation.
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We have computers. The IRS has computers. It’s a simple data entry job, and the computer spits out the number. The math underneath doesn’t need to be simple. Only the programers need to understand it.
A huge reason for the progressive rates instead of just a minimum floor is that the marginal value of a dollar is greatly reduced once you have enough of them.
If you’re headed out on a road trip, and you have $10 on you for the entire trip. Spending $2.5 on a cup of coffee is a poor value.
If you’re headed out on a road trip, and you have $1,000 on you for the entire trip. Spending $2.50 on a cup of coffee isn’t a big deal.
To the coffee shop, the perspective is that $2.50 is worth $2.50. While to the traveler, the personal marginal value of the $2.50 is very different in the two scenarios.
The entire point of having the rate go up on the marginal additional income is to balance with this perceived value.
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I’m pretty sure that you could express the existing income tax brackets using your notation. Whether it would be clearer or more confusing is up to the reader
The nice thing about brackets is that it makes it extremely clear that earning another dollar doesn’t affect tax on all the previous dollars.
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I don’t think I’ve heard anyone say it will fund healthcare. Certainly I haven’t heard that from AOC - I think she referenced a 70% tax rate in reference to a Green New Deal.
Part of the Green New Deal concept is to reduce inequality, and taxing the rich goes pretty directly to that. I’d also like to see a pretty hefty inheritance tax in the mix.
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In 1946 the income tax on every dollar earned above $25,000 was around 94%. That translates to about $325,000 in today’s dollars.
SUCK. IT. UP.
(Also: you get that the 70% tax rate is on the 500,001st dollar, right?)
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I would like to see fines implemented progressively.
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Oh, get over your Libertarian self. The people in the USA who actually build things and take care of other people live paycheck-to-paycheck. There’s nothing about what hedge fund managers, CEOs and Silicon Valley VCs actually do that’s worth the proportional difference in income over others.
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But … but … they’re (wait for it) Job Creators. Do you think all those part-time and gig economy careers with no benefits are just gonna create themselves if you punish these towering tycoons? Huh? Huh? Gotcha! Why do you hate capitalism, you Stalinist?
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That values investment capital more than the work that increases the value of the investment itself. Using your example of building a factory, which is worth more to the investment: the building and its equipment or the skill and work of the laborers who build the widgets in the factory? It’s a trick question, because without both, the investment is worthless. So why does a skilled technician pay 28% tax on the income from the work of their hands and mind, while the investor pays 15% on the increase in value while they sit on their ass?
ETA: Also, your plea doesn’t really capture the nuance of modern financial markets. A significant portion of the investments that are popular with the ultra-wealthy aren’t investments in factories but derivatives and tranches that aren’t really tied into real property. They are derived (thus the term) from bets made by one financial firm with another. They have the practical, real-world impact of placing a bet in a game of craps.
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Unless we do a similar progressive structure to the capital gains tax, this <$500k income area where most CEOs reside. Typical salary is a bit over $300k, with the other $15M+ coming from stock options and other non-salary incentives.
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It seems crazy, but $500k* or even $1-million as the threshold starts hitting people who live in high cost-of-living areas, at least in the medium and short term. That’s not to say that they’ll be in the poorhouse, but they’re not going to be able to live up to non-frivolous multi-year commitments they’re locked into under the old tax-bracket assumptions: mortgages and property taxes on modest but insanely priced homes, ever-inflating college cost for the kids, etc. In the longer term the real estate market and education markets would have to adjust, but it would take a while.
Also, when you’re at the $2-million or less cut-off range, the conservatives opposing any 70% marginal bracket will be able to roll out a lot more “relatable” and “aspirational” sob stories about seemingly “middle-class” people getting hurt by it. Yes, they’ll be bogus, but they’ll also be effective with the Know-Nothing base. At $10-million, it’s going to be near-impossible for them to use that tactic.
I suspect AOC’s and her advisors’ idea is to first get people used to and accept the idea of the 70% bracket with the $10-million threshold, wait a few tax seasons to show the world didn’t end, then push the threshold down to $5-million and bring in higher capital gains taxes (progressive structure that protects retirement savings). If that works (which it likely will) they might go to $2.5-million but that will probably be it.
[* the current threshold for the top 37% marginal bracket]
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True, but most people just don’t reach that level of income overnight. That’s the other factor here: the tax structure is based on income, not wealth. Most people who make $500k+ per year have spent most of a decade approaching that figure, unless we’re talking professional athletes or popular entertainers. Along the way, if they didn’t leverage themselves up the hoo-hah, they’ve built up capital to reduce the burden of buying those modest but incredibly overpriced homes.
I would definitely support some form of exception for people who only hit that level of income sporadically. For example, some people who work at a company for a long time and with a pretty good salary then get laid off late in the tax year could get a severance that doubles their income, but only for that year, then they’re looking for work with much lower income in the new tax year. They shouldn’t get taxed in the top bracket, but that’s exactly what happened to a number of people close, but not quite to retirement yet, in the 2008 financial crisis.
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Is everyone on board?
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meh. i hate the idea that paying taxes is somehow charity. it’s a neoliberalism that seeks to undermine the meaning of taxation.
money is backed by the government and given value by the people. in exchange for the right to earn, have, and hold money you agree to the responsibility of following the laws including paying taxes.
if you, for instance, make your own (counterfeit) money, the government will jail you for undermining the value of the dollars held by the rest of us.
taxes are the same. you pay it to keep the government ( and the public at large ) going. if those are undermined, your money will be valueless anyway.
taxation is a responsibility, a requirement of doing business and earning money. it’s not charity. it’s not a donation.
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