Should the rich pay a higher tax rate?

[Pontiuth Pilate]

Taxes should be on this scale:

n^x - U
V

Where n is your net income for the year, and x, V, and U are variables. For example, if you make 100 dollars, and [x, V, U] are [1.01, 3, 10] then you pay

100^1.01 - 10
3

or $24.91 per year. No loopholes, no credits, NOTHING. No accountants even.

It will no longer be possible to fake numbers about taxation and thus gull people into thinking their taxes are being "lowered" or "raised" when in fact the opposite is the case. x, V, and U will naturally adjust themselves - anyone can easily find out how much they pay under any possible scheme and in the end the majority will decide.

 

[IglooDame]

Originally posted by Pontiuth Pilate
Taxes should be on this scale:

n^x - U
V

Where n is your net income for the year, and x, V, and U are variables. For example, if you make 100 dollars, and [x, V, U] are [1.01, 3, 10] then you pay

100^1.01 - 10
3

or $24.91 per year. No loopholes, no credits, NOTHING. No accountants even.

It will no longer be possible to fake numbers about taxation and thus gull people into thinking their taxes are being "lowered" or "raised" when in fact the opposite is the case. x, V, and U will naturally adjust themselves - anyone can easily find out how much they pay under any possible scheme and in the end the majority will decide.

Could you explain what the variables x, V, and U represent?

 

[luiz]

Originally posted by Pontiuth Pilate
Taxes should be on this scale:

n^x - U
V

Where n is your net income for the year, and x, V, and U are variables. For example, if you make 100 dollars, and [x, V, U] are [1.01, 3, 10] then you pay

100^1.01 - 10
3

or $24.91 per year. No loopholes, no credits, NOTHING. No accountants even.

It will no longer be possible to fake numbers about taxation and thus gull people into thinking their taxes are being "lowered" or "raised" when in fact the opposite is the case. x, V, and U will naturally adjust themselves - anyone can easily find out how much they pay under any possible scheme and in the end the majority will decide.

Assuming that "x" and "v" are always proportional, you can simplify the equation.

n^k - U

(k=x/v)

 

[Pontiuth Pilate]

The graph of the function is always an exponential curve. That is no matter what the variables, the poor pay less and the rich more. [EDIT: supposing that x>1. Which flat-raters would disagree with ]

X represents the steepness of the curve. When x is greater, the rich pay exponentially more. When x is 1, everyone pays the same percentage of their income. If x is less than 1, then the rich pay exponentially less - the richer you are the lower a percentage of your income you pay.

V represents the overall size of the tax. When x is 1 [that is, everyone pays the same percentage of their income] then that percentage is 1/V [if V=2 then everyone is taxed at 50%]. The higher V is, the lower the overall tax rate. The lower V is, the greater the percent of your income that is paid out to the Feds.

Finally, U is the deduction. In our current tax system there is already a sum [$10,000?] which is exempt from tax - if you make less than ten grand you don't have to pay tax at all! U works the same way. Suppose you want to exempt everyone who makes less than ten grand from taxes? You figure out what (10000^x)/V is with your chosen x and V and make U equal to that sum. Anyone who has 10,000 or less as n will therefore end up with a negative number and not have to pay taxes.

The poor will normally advocate a high U, to exempt the greatest number of people.

The rich will normally advocate a low X, so that they are paying a more "average" share of the taxes.

Advocates of fiscal conservativism will want a high V, so that the total tax revenue will be low, while those who want the federal government to spend more will want a low V.

 

[Pontiuth Pilate]

x and V are not necessarily proportional. Some people will want low taxes at a flat percentage rate [so they'll advocate a low x and high V]. Others will want the rich to pay a greater share and for the government to spend more [high x, high V]. Still others will want progressive taxation but simultaneously reign in federal spending [high x, high V].

 

[Archer 007]

Interesting concept, PP.

 

[Archer 007]

Originally posted by stratego


No, capitalism is great. When I was six, USSR fell and I was there to help break the Berlin Wall.

That means your in your mid 20s. Too young to have a 14 year old son.

 

[Pontiuth Pilate]

It's not revolutionary, it's just a simplification. The easier things are to understand, the harder they are to corrupt. Why do we need a truck to cart around the Federal Tax Code? Why do flat-raters deplore progressive taxation but simultaneously demand credits and deductibles?

No subsidies, no perpetual welfare, no tax loopholes, no credits, and no ridiculously arcane minutiae!

 

[Toasty]

"The strongest shoulders carry the most weight."

 

[Pontiuth Pilate]

"The strongest shoulders carry the most weight."

"Even in a zoo, a lion should be declawed".

The argument for progressive taxation is not a moral one - progressive taxation is not moral. One of the goals of government is law and order - that is, to prevent a power or faction in the country from attaining greater power than the government itself. That's why we should be "compassionate" to the less fortunate - not because it's "right" or "moral", but because it staves off civil unrest. And that's why progressive taxation is necessary - because money makes money makes money makes power. Excessive wealth stratification is a direct and indirect danger to the state because it represents an aristocracy of money/power. "Even in a democracy, the danger of excessive power is only nominally restrained".

 

[Archer 007]

^ Couldn't have said it better myself.

 

[Toasty]

You can say its an issue of maintaining the masses; I view it as a logical way for the collective advancement of society. Either way, we ultimately agree .

 

[amadeus]

Left-wing tax schemes kill genius, eliminate them.

 

[funxus]

Originally posted by rmsharpe
Left-wing tax schemes kill genius, eliminate them.

Not kill, but it might oppose them if the geniuses are rich from the beginning, but to become a genius in today's society, you usually need an education, and if you give an education to the poor, you'll have a much larger mass to find geniuses in.

As a Swede, I definitely agree on progressive taxing. Although I probably won't like it if I become rich, I will think it's the right thing.

@PP, good posts.

 

[Stapel]

The only thing that is useful imho, is that taxes should be payed form a certain income. First 10k no tax. Anything over that 30%.

 

[Hayek]

Originally posted by Achinz
Just look at the US of A. When I visited parts of it for the first time in 1992, I was frankly horrified by the sheer misery of the poor. We don't have such visually graphic examples of indignity and deprivation in Oz although we're far from the "richest country in the world" - a classical liberal country in your terms".

This was aggravated by a sense of fear, the concern for personal safety in such areas as East LA (it was just after the race riots there) and the no-whiteman's land in Harlem, New York city.

Everywhere you go eg MacDonald's with their signs of "max time 30 minutes, no loitering" and the need to get a key from the servers before being able to use the toilet.

The bullet- proof tiny kiosk of a gasoline station in rundown Hollywood where you pay first and get the hell out of there.

If these are not signs of a major social dislocation in a "liberal society" I don't know what are!

Actually, the USA is not my ideal classical liberal country. Taxes are still quite high there (IIRC around 40 per cent of GDP, maybe slightly more). You do have a point, though. Poverty (often combined with unemployment) can cause crime. I must have somehow missed that in your other post, I was thinking more of unrest as in risk of the establishment getting overthrown(!).

Still, it's not the fault of the rich that the poor are poor and the rich do not - by being rich - prevent the poor from making money and becoming richer. People can often do something about their situations in capitalist countries, there are often more job opportunities the more market liberal a country is, for instance. Therefore, in a capitalist country, it doesn't really matter if person A is a million times richer than person B.

 

[ShiplordAtvar]

Originally posted by stratego
The Why Kerry Won't Win thread is turning into a tax rate conversation, so I'm making it it's own thread.

Should the rich pay a higher tax rate than the poor?

Everyone should have the same income tax rate (NO DEDUCTIONS). Rich people will still pay more in taxes, because they have more income to be taxed. Poor people will still pay less because they have less income to be taxed. This way, if your income changes from one year to the next, you aren't penalized in terms of tax rates.

 

[jack merchant]

Why no deductions ? Without them, a flat tax rate becomes quite regressive ! Consider: households need at least a certain income just to survive, to buy food, housing, health insurance et cetera. Now suppose your average household has to spend $10,000 a year on 'essentials' (figures for illustration) and a household earns 20k a year. Assuming a 20% flat rate, their taxes due would be 4,000 dollars. This is 20% of their income, but if you look at it more closely, the effective tax rate is actually 40% ( 4k/ (20-10k) of their disposable income ! Contrast this with a household earning 100k a year with 20k in taxes due - subtracting the essentials again their tax rate actually works out to 20/90 = 22.2% of their disposable income. I don't see how anyone can call that fair. This effect alone already is an argument for a slightly progressive tax rate, since you need to take into account more than just the rate to consider the effective impact of taxation.

 

[stormbind]

Originally posted by rmsharpe
Left-wing tax schemes kill genius, eliminate them.

That's must be why the UK (with socialist tax and welfare) has provided the greatest number of technological advancements...

The historic principle responsible for that success was to take wealth away from the rich, and educate the next generation (rich and poor) to a very high standard.

 

[amadeus]

Technological advancements since when, storm? If you're talking about since the 15th century, that's totally different.