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The only good thing that can be said about the system of "income taxation" is that it gives people a large-ish chunk of money to spend once a year. One of my pa

The only good thing that can be said about the system of "income taxation" is that it gives people a large-ish chunk of money to spend once a year. One of my passengers blew a good chunk of her refund paying me to chase after her boyfriend.... Otherwise, the system is essential for establishing and maintaining the country's unequal distribution of wealth. Why is it that unearned income (investments) is taxed at 15%, while labor (survival money) is taxed at 25+% ($37,651 to $91,150)? The most important tax reform we need is to eliminate most people's tax burden. I think the 'negative income tax' is a reasonable proposal.

Arnt 9y ago
It isn't. You're disregarding corporate tax. The unearned income tax is levied on after-tax profits of the corporation that pays the dividends. Suppose yo're a dentist. You have your own little dentist company, your assistant/s is/are employees of that. Now you have to choose how to pay yourself: Pay yourself a salary (which you set in December) or take the profit? If you do the former, you'll pay regular income tax. If you do the latter, the company will pay corporate tax on the profits, pay you a dividend and then you pay unearned income tax. One of the goals of a modern tax system is that your after-tax income should be roughly the same in both cases. Motivated by fairness, by a desire that tax rules shouldn't motivate business decisions, or both.