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>arbitrarily-imposed taxes Isn't a progressive tax system basically the opposite of an arbitrarily defined system? Perhaps you can quibble over where each prog
by gph 9y ago
>arbitrarily-imposed taxes
Isn't a progressive tax system basically the opposite of an arbitrarily defined system? Perhaps you can quibble over where each progressive quantile is delineated, but a system defined by raising taxes on those who make the most is not an arbitrary one. In fact it's a system based on determined reason. Just because you disagree doesn't make it arbitrary.
- sedeki 9y agoI think 102% in taxes is definitely not reasonable...
- logfromblammo 9y agoThat would be a marginal tax rate. Such would establish an income level above which it becomes more desirable to reduce one's taxable income rather than pursue additional income. Every additional euro would go to the state, plus a 2% fee for having the audacity to earn more money when you already earn too much. Assuming there is a deduction for charitable contributions, that's when you direct your accountant to dump any unexpected windfalls into your favorite charity, so that you save that 2%. Or, more cynically, you might direct your company to reduce its dividend and spend some extra money on an executive retreat. I can see how a 102% marginal rate might seem reasonable to an insane person. But I think the highest marginal rate you can charge without causing unexpected bizarre avoidance behaviors [that may spill over onto other people] is probably 50%.
- charlesdm 9y agoI'm a sane person, and 50% still seems pretty crazy to me. Make a million, lose half. Then there's 10-20% sales tax on everything you buy. The only thing that can be said in those cases: time to move.
- 1986 9y agoBut with 50% as the highest marginal rate, you don't lose half if you make a million. You lose half of everything earned above $xxxK, as set by the tax authority.
- charlesdm 9y agoYes, I am aware how a progressive tax system works. In most countries the threshold for the top rate is ridiculously low however, e.g. between €50-100k. So to correct my statement: make a million, pay 35% (averaged out over different tax rates) on the first €XX.000, and then lose half of the remaining €XXX,000. Is that supposed to make it better?
- arethuza 9y agoMost people who make a few million probably do it as a capital gain rather than income - so different tax rules will apply. e.g. Higher rate income tax in the UK is 40% for income over £45K (to £150K). However with capital gains tax with things like taper relief you can end up paying 10%.
- charlesdm 9y agoYes, for people building / buying / selling assets (e.g. entrepreneurs and investors) this generally applies. But your average doctor won't be booking capital gains on his (earned) income any time soon. Just pointing out that having income taxes that are too high is often counterproductive for society, just because they can easily be avoided by the wealthy. I guess the differentiation (and justification) is mostly a way to make sure the masses who actually use the infrastructure pay more than the one wealthy person who uses it, but don't need it as much.
- arethuza 9y agoWell, wealthy people have have, by definition, more assets that need protection by state provided legal, police and security services - so I would say it is debatable that rich people need the state less.
- deleted 9y ago[deleted]
- beefield 9y agoWeirdly enough, US has had a significant time period with top marginal rates exceeding 90%. Interestingly, GDP growth rates during that time have not been repeated since. https://en.m.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates https://en.m.wikipedia.org/wiki/Income_tax_in_the_United_Sta... http://ablog.typepad.com/.a/6a00e554717cc988330147e220e3f9970b-pi http://ablog.typepad.com/.a/6a00e554717cc988330147e220e3f997...
- zanny 9y ago102% is a wealth tax. If your state gets to the point where wealth is so concentrated it is crippling your economy catastrophically, it might require the extreme measure of taxing so much you take wealth from the rich to fund whatever recovery measures you are taking. It is an exceptional situation, but its also a possibility. Greater-than-income taxes aren't simply unreasonable.
- charlesdm 9y ago"It might require the extreme measure of taxing so much you take wealth from the rich to fund whatever recovery measures you are taking." Punishing capitalists for creating wealth is just stupid. Let's say you live in country X, and country X does this. Generally there are sufficient ways for wealthy people to avoid being taxed at 102%. However, in the case where they would in fact have to pay such ridiculous tax rates, they would either: 1) stop working and investing and just live off of their capital, to be exempt from the tax (not great for the local economy + because what's the point / why would I risk my money?); or 2) leave (even worse). Personally I'm not a believer in that wealthy people will easily relocate when taxes are raised, but in this case, I do believe they would. There's a certain cutoff point where it just gets unacceptable and it becomes a no brainer.
- clort 9y agoI think you underestimate the motivation of successful capitalists. None of the self made wealthy people I know would have be able to stop working, they are driven to make money before anything else. Contrast to myself, who certainly knows how to relax I've never made any money at all and the time I lucked into some, I took years off and spent it.
- charlesdm 9y agoI agree they would not. But with a 102% tax rate, the only way for you to make (more) money would be to relocate somewhere else.
- 9y ago
- anigbrowl 9y agoIt is if you were underpaying in a previous year. Lifting data points out of context is rarely informative.
- atemerev 9y agoAnd what is the reason for that? People who make more will pay more even with flat tax rate — such is the nature of linear functions. Progressive tax rates, on the other hand, are completely not rational — they are rooted in contempt ("they earn so much, why can't they pay a little more than low-earners?"), which leads to perceived (if not actual) unfairness and enables evasion.
- vkou 9y agoProgressive tax rates are rooted on the indisputable fact that the marginal value of a dollar for someone in the lower 25% of incomes, is much lower then the marginal value of a dollar for someone in the upper 1% of incomes. People also don't evade taxes because they feel personally slighted. People evade taxes because the ROI on doing so is positive. Because they can, and because they won't go to jail for it.
- dpark 9y ago> the marginal value of a dollar for someone in the lower 25% of incomes, is much lower then the marginal value of a dollar for someone in the upper 1% of incomes. Did you say that backwards? The value of a dollar to someone in poverty is much higher than the value of a dollar to Bill Gates.
- ryanwaggoner 9y agoNo, the post-hoc justification is sometimes anchored to the concept of marginal utility to the individual by people who want more progressive taxes. You rob banks because that's where the money is, not because you feel like the bank can more easily handle the loss.
- caf 9y agoIn this case though, it's not where the money is. Raising the bottom marginal rates produces far more additional tax revenue that raising the top ones.
- Mvandenbergh 9y ago