I'm serious...

Reader comment on: Elites Research Network
in response to reader comment: If he were serious

Submitted by Jeffrey Winters (United States), Nov 13, 2010 22:49

But I still reject your proposal against a progressive tax system. The problem is not tax progressivity -- the simple moral notion that those much less able to meet basic human needs ought to pay a smaller proportion of their available resources in taxes than those who live in relative opulence.

The actual problem is tax exemptions and loopholes. A flat tax is one rate with zero exemptions. That is much easier to enforce (harder to evade) than the current mess, but it is also highly regressive and thus immoral. It is just as easy to administer and enforce five progressive rates with no exemptions as it is to enforce one rate with no exemptions. Note that the ultra rich use their money to avoid and evade taxation whether the marginal rate on their incomes is 60 or 30 percent.

How about this proposal: cut all exemptions (including the home owner exemption). And then have a 5-step graduated tax system in which no one pays federal taxes on their first $50K of income. Then the tax rate is 15% on the next additional $50K, 25% on the next $100K, 40% on the next $200K, 50% on the next 600K, and 60% any additional income beyond this first $1 million (no matter what the form -- compensation income, capital gains, it doesn't matter). So, here's what the tax rate and payments would be for different incomes:

Income / Effective Rate / Federal Taxes

$50K / 0% / $0

$75K / 5% / $3,750

$150K / 13.3% / $7,500+$12,500 (=$20,000)

$300K / 24.2% / $7,500+$25,000+$40,000 (=$72,500)

$500K / 32.5% / $7,500+$25,000+$80,000+$50,000 (=$162,500)

$1M / 41.3% / $7,500+$25,000+$80,000+$300,000 (=$412,500)

$10M / 58.1% / $7,500+$25,000+$80,000+$300,000+5,400,000 (=$5,812,500)

Eventually as one reached the $100M annual income point, the effective tax rate on the ultra rich would approach a flat 60%. Today it is under 20%.

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Other reader comments on this item

Title By Date
Subject evasion [81 words]Jeffrey WintersNov 13, 2010 21:39
There you go again. . . [151 words]benOct 17, 2010 21:49
If he were serious [96 words]Jose A HernandezOct 17, 2010 20:24
⇒ I'm serious... [309 words]Jeffrey WintersNov 13, 2010 22:49

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