4 ms·

A non-zero second deriviate invites gaming. The tax rate (e.g. 20% or 35%) is per "unit". If the marginal rate is too high, you can always break up into small

by nicker 17y ago

A non-zero second deriviate invites gaming. The tax rate (e.g. 20% or 35%) is per "unit". If the marginal rate is too high, you can always break up into smaller units (e.g not get married or split up a company) or defer realizing income until next year, then your overall tax burden is lower. A flat rate means that scale and timing do not effect the amount of taxes paid.

eru 17y ago
And that's why capital taxes are flat. It's much harder to split up personal income. So you can say that flat taxes are harder to game. That's a good thing. But I do not know whether it relates to a sensible definition of `fair'. (Approval voting is also harder to game than first-past-the-post. And arguably more `fair', because a third (and fourth) party candidate does stand a chance _and_ does not have to split the votes with another candidate who happens to have similar appeal.)
- nicker 17y ago
  First, it costs a lot (accounts and attorneys) to game the tax system. So only "the rich" can afford it. The net result is progressive taxes wind up hurting the "doing well but not rich yet". Second, if I go to a store and buy a chair the sales tax rate is flat. Everyone pays the same rate. That seems fair. But if I make a chair and sell it, the income tax I pay on the gain depends on how much income I've made that year. Thus two people making the same chair and selling it for the same gain would pay different amounts of income tax. That unequal taxing of the same gain is what is unfair about a progressive tax rate. It's much harder to split up personal income. The flat tax is not an income tax. It is a tax on the creation of wealth. Most people think a flat tax means just changes our current tax system to have just one tax rate. The Flat Tax is a complete re-architecture of what and how to tax.
  - eru 17y ago
    We do not disagree completely. There are also some good arguments for taxing consumption instead of production (=wealth creation). Do you want to hear them?
  - thwarted 17y ago
    Sales tax is considered a regressive tax. http://en.wikipedia.org/wiki/Sales_tax http://en.wikipedia.org/wiki/Sales_tax

by nicker 17y ago

eru 17y ago

And that's why capital taxes are flat. It's much harder to split up personal income. So you can say that flat taxes are harder to game. That's a good thing. But I do not know whether it relates to a sensible definition of `fair'. (Approval voting is also harder to game than first-past-the-post. And arguably more `fair', because a third (and fourth) party candidate does stand a chance _and_ does not have to split the votes with another candidate who happens to have similar appeal.)

nicker 17y ago
First, it costs a lot (accounts and attorneys) to game the tax system. So only "the rich" can afford it. The net result is progressive taxes wind up hurting the "doing well but not rich yet". Second, if I go to a store and buy a chair the sales tax rate is flat. Everyone pays the same rate. That seems fair. But if I make a chair and sell it, the income tax I pay on the gain depends on how much income I've made that year. Thus two people making the same chair and selling it for the same gain would pay different amounts of income tax. That unequal taxing of the same gain is what is unfair about a progressive tax rate. It's much harder to split up personal income. The flat tax is not an income tax. It is a tax on the creation of wealth. Most people think a flat tax means just changes our current tax system to have just one tax rate. The Flat Tax is a complete re-architecture of what and how to tax.
- eru 17y ago
  We do not disagree completely. There are also some good arguments for taxing consumption instead of production (=wealth creation). Do you want to hear them?
- thwarted 17y ago
  Sales tax is considered a regressive tax. http://en.wikipedia.org/wiki/Sales_tax http://en.wikipedia.org/wiki/Sales_tax