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Income tax is such a bitch to deal with. I used to support the idea of replacing it with GST/VAT because then I'd not have to deal with it. But then someone pointed out that disproportionately benefits the rich (who mostly just hold wealth rather than spend it) and disadvantages the poor (who cannot avoid paying for things).
So fuck it. Make it all income tax and get rid of the others! :P
(In before this is also a bad idea somehow)
For clarity, say Kalkaline earns 100k a year. Ideally the billionaires would bring home exactly the same on their first 100k as Kalkaline does.
Marginal tax rate means the higher tax brackets only tax you in the money made above a certain amount. And it's the same for the next higher up tax bracket, which doesn't apply to any lower money.
If you're not getting welfare, there is no "next tax bracket" that's going to make you bring home less when earning more. That's not a thing.
If you get a bonus, that might be ~~taxed~~ withheld at 50% because payroll is too lazy to figure out your taxes. You get the remainder back when you file your taxes. (Note this may mean you owe $200 at the end of the year instead of owing $1000. That still counts as you "getting" $800.)
We could put an 80% marginal tax rate on incomes above a billion dollars, and it wouldn't really touch someone who was only bringing home 1,030 million dollars a year.
One very slight correction in bold.
Also it's 22% and it's not solely because payroll is lazy. It's actually set by federal statute
That must be before other, additional payroll taxes.
Yeah add SS and Medicare to that if you're not capped already. And of course any state taxe
Edited, thanks.
I’d prefer a 70% tax on billionaires, but I’d settle for 50% for anything above 5million. Take Elon for example, the guy makes an estimated $50,000USD per minute. Yes folks, the guy makes more per minute than the average American does in a year.
prove to me that billionaires should exist. Tax them accordingly.
Progressive tax brackets make things complicated, in myt opinion. I always like the idea of a large tax free bracket and then taxing. 30-40% for the rest. No tax deduction, everybody has to pay up. You could also go for fixed tax brackets like 15%, 25% and 35% and also no tax deductions.
The problem is that tax deductions/credits are a useful tool for guiding certain activity. We want people to put up solar panels, so we give a tax credit for that.
The other argument for a progressive system is using money for necessities instead of luxuries or investment. Your first $40k or $50k or so is spent on the basic cost of living. After that, you're using increasing amounts for things you don't strictly need. So you want to tax that first $50k or so very little, perhaps none at all, and then ramp it up on the people who are just spending money on fast cars or dumping it into SPY or whatever.
There's a ton of twisty little ways the tax system makes everything fair-ish. Turns out, running a country of 330M people and an annual GDP of $25T is complicated. It's not always a fair system, but it's more fair than it looks at first glance.
It's the most practical tax idea I've heard in forty years, tbh.
Heard about the Land Value Tax 41 years ago, huh?
It's the least practical tax idea I've heard in forty years.
Taxes usually start out simple, since that appeals to people. Then over time they get more complicated as people discover more and more edge cases to exploit.
If you make it all income tax, well, what counts as "income"? Elon Musk just got "paid" $46 billion worth of stock in Tesla, for example. But it's not actually 46 billion dollars. It's a share in ownership of a company. Those shares can't actually be sold for 46 billion dollars. Trying to sell them would cause their price to drop. He can't actually sell them at all right away, for that matter - they're restricted stock. He has to hold on to them for a while, as incentive to keep doing a good job as CEO.
So if he keeps doing a good job as CEO and the stock goes up in value by 10 billion dollars, was that rise in value income? What if it goes down by 10 billion instead?
This stuff is inherently complicated. I'm not sure that any simple tax system is going to work.
He should have to pay income tax on the value of the stock on the day he "took possession" of it.
In 3 years, he says something on Twitter to pump the stock, and dumps a lot of it. He should have to pay tax (capital gains?) on the additional value of the stock that he sells.
If the value goes down and he sells it, it's a deduction.
I don’t know if this isn’t already a thing, but if he uses that stock as collateral to overpay for another social media company, or some other stupid flex, he should be taxed on that valuation with no deductions whatsoever.
Darn it, you're right.
And as I suspected would be the case, some other folks have responded to my comment with a bunch of additional "simple" suggestions for what to do in this case. Which have hidden exceptions of their own, which will have unexpected impacts and loopholes, which will then elicit further "simple" suggestions for how to fix them, and before you know it we've got a complex tax code again.
There's an old quote of unclear providence that I think applies here, "everything should be made as simple as possible, but no simpler".
No that's about right. The big problem we have right now is we've lost the ability to effectively tax people who don't live on an "income". So we need a second system for people who are insanely wealthy.
Be mad that income tax is unnecessarily difficult to deal with. As has been pointed out by others online a lot recently, the US makes personal income taxes hard, where other countries you can fill it out in minutes if you have no deductions, and less than an hour if you do (and have kept good records).
No one likes paying taxes (usually) but since the process is so painless I don't hear people complaining about income tax that much (outside of the right-wing media in my country, Australia)