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>I think the idea is that you raise taxes such that the middle class sees no difference, the rich pay more in taxes, and the poor receive more money. But will

>I think the idea is that you raise taxes such that the middle class sees no difference, the rich pay more in taxes, and the poor receive more money. But will that actually work out mathematically and economically? High income earners in big cities are already paying nearly 50% marginal income tax rates. These people only work that hard to keep the golden handcuffs. If you take that away, they aren't going to continue.

vostok 9y ago
High income earners in big cities are not typically considered to be part of the middle class. This proposal still lets them (us) keep the golden handcuffs because post tax income is still monotonically increasing in pre tax income under the proposal.
- stale2002 9y ago
  Monotonically increasing income isn't enough. If marginal tax are 90%, why would anybody be stupid enough to take an 80 hour a week job that only pays a little bit more, due to taxes, than a similar 6 figure salary job that only requires 40 hours a week? 100k-300k salary jump works out to only 20k increase, at 90% marginal tax rates. I myself have certainly considered taking a job in finance, or at a high-payed, but stressful, tech company. And it is a hard tradeoff that I think about. More money vs less stress and less hours. And if marginal taxes were something like 90% there is no way I would even CONSIDER the job that now doesn't even pay that much more. I'd just switch to some 30-35 hour a week, "life-style" business that still pays OK, and, I'd chill. I mean, why bother, right? I am motivated by incentives. Remove those incentives and you remove my motivation.
  - pdimitar 9y ago
    I think that the people who were smart enough to propose a viable alternative will also be smart and proactive enough to do their best to tweak the numbers. That being said, your example is excellent and I absolutely agree. There are a good number of people who we the gamers classify as "try-hards" who would still do what you said you wouldn't, because they are like "if I work hard enough I'll get more money than every other loser relying on universal income around me" -- but yes, they are a minority.
- rhino369 9y ago
  Just because income increases, doesn't mean it's worth the effort. Why work hard to make 200k, when your 100k job nets only 25k a year less? Some jobs are all or nothing, but a lot aren't.
ska 9y ago
But will that actually work out mathematically and economically? You can make it work, yes. Should you is a whole different argument - but bear in mind the rates on high earners have been much higher in the past. So there is at least some historical evidence that your last statement is not strictly correct.
- rhino369 9y ago
  The top marginal rates were higher in the past. But there were huge deductions and loopholes. The percent of income captured by those taxes weren't really much higher. So raising from 39%->90% barely created any more tax revenue. Which is why I wonder if the math and economics works out. If you tax all income over 1 million at 90%, the partners at the firm I work for who make on average ~2 million will just incorporate and take equity instead. If you raise capital gains rates to 90%, nobody would invest another dime in America. I'm very skeptical that the top 10% of earners are going to sit still while you take 75% of the money they earn.
  - ska 9y ago
    Sure, it's an interesting question, but it's hardly obvious to answer. You're just throwing numbers around to, we could do that all day and not really get anywhere. Again, I'm not arguing for or against - just for better quality arguments about it. There are at least plausible sounding reworkings of the tax code that could achieve this (far less than your 90% scenario). Far better to argue about those, than straw men. Both pro and con sides of this debate seem to be more fond of the straw men.
    - rhino369 9y ago
      I am definitely throwing around numbers, but I specifically asked if the math and economics worked out. The people wanting a radical change to the system of income distribution need to prove their system works. I'm sure someone has done the math.
  - vostok 9y ago
    Can you explain how you arrived at 75% effective tax rate for the top 10% and 90% marginal tax rate for income over $1 million? The math isn't working out for me.

vostok 9y ago

High income earners in big cities are not typically considered to be part of the middle class. This proposal still lets them (us) keep the golden handcuffs because post tax income is still monotonically increasing in pre tax income under the proposal.

stale2002 9y ago
Monotonically increasing income isn't enough. If marginal tax are 90%, why would anybody be stupid enough to take an 80 hour a week job that only pays a little bit more, due to taxes, than a similar 6 figure salary job that only requires 40 hours a week? 100k-300k salary jump works out to only 20k increase, at 90% marginal tax rates. I myself have certainly considered taking a job in finance, or at a high-payed, but stressful, tech company. And it is a hard tradeoff that I think about. More money vs less stress and less hours. And if marginal taxes were something like 90% there is no way I would even CONSIDER the job that now doesn't even pay that much more. I'd just switch to some 30-35 hour a week, "life-style" business that still pays OK, and, I'd chill. I mean, why bother, right? I am motivated by incentives. Remove those incentives and you remove my motivation.
- pdimitar 9y ago
  I think that the people who were smart enough to propose a viable alternative will also be smart and proactive enough to do their best to tweak the numbers. That being said, your example is excellent and I absolutely agree. There are a good number of people who we the gamers classify as "try-hards" who would still do what you said you wouldn't, because they are like "if I work hard enough I'll get more money than every other loser relying on universal income around me" -- but yes, they are a minority.
rhino369 9y ago
Just because income increases, doesn't mean it's worth the effort. Why work hard to make 200k, when your 100k job nets only 25k a year less? Some jobs are all or nothing, but a lot aren't.

ska 9y ago

But will that actually work out mathematically and economically? You can make it work, yes. Should you is a whole different argument - but bear in mind the rates on high earners have been much higher in the past. So there is at least some historical evidence that your last statement is not strictly correct.

rhino369 9y ago
The top marginal rates were higher in the past. But there were huge deductions and loopholes. The percent of income captured by those taxes weren't really much higher. So raising from 39%->90% barely created any more tax revenue. Which is why I wonder if the math and economics works out. If you tax all income over 1 million at 90%, the partners at the firm I work for who make on average ~2 million will just incorporate and take equity instead. If you raise capital gains rates to 90%, nobody would invest another dime in America. I'm very skeptical that the top 10% of earners are going to sit still while you take 75% of the money they earn.
- ska 9y ago
  Sure, it's an interesting question, but it's hardly obvious to answer. You're just throwing numbers around to, we could do that all day and not really get anywhere. Again, I'm not arguing for or against - just for better quality arguments about it. There are at least plausible sounding reworkings of the tax code that could achieve this (far less than your 90% scenario). Far better to argue about those, than straw men. Both pro and con sides of this debate seem to be more fond of the straw men.
  - rhino369 9y ago
    I am definitely throwing around numbers, but I specifically asked if the math and economics worked out. The people wanting a radical change to the system of income distribution need to prove their system works. I'm sure someone has done the math.
- vostok 9y ago
  Can you explain how you arrived at 75% effective tax rate for the top 10% and 90% marginal tax rate for income over $1 million? The math isn't working out for me.