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What really annoys me is the slope of taxation in most developed countries and how it just suddenly stops going up after your salary exceeds around $150K. If y

What really annoys me is the slope of taxation in most developed countries and how it just suddenly stops going up after your salary exceeds around $150K. If you earn less than $10K, you pay 0%; that makes sense, then if you earn $150K, you pay close to 50%... OK you could argue that this still makes sense. But then if you earn $200 million per year, you still only pay 50% tax - This makes no sense; the tax rate should follow a Lorenz curve which mirrors and offsets income inequality. To earn $100K+ as a professional using nothing but your brain is bastard-hard. It takes a toll mentally. Someone who owns stocks and is earning $500K+ per year from dividend payments while sitting around in their underwear all day doing nothing should be taxed at a much higher rate than someone who earns $150K by mutilating their brain every day. That seems extremely obvious to me. The most infuriating thing about the current tax system is that the magical $150K number (where the tax rate suddenly levels off) is in fact the exact point after which earning money starts to get easier. This is exactly the point when the tax rates should start really sloping up - Not the point where they should level off! Also, I think that the argument about protecting rich people so that they can have extra money to invest back in the economy is no longer valid. With innovations in crowd funding, large numbers of people can now easily pool their resources together to fund very significant and meaningful projects. Rich people these days are only interested in monopolising markets; not adding value.

projectramo 9y ago
I agree with some of the general sentiment here but what I don't understand is why how hard one works or how much toll it takes should have anything to do with taxation. For instance, suppose you're a happy go lucky guy who doesn't need much sleep and have a happy home life, and I am a grumpy dude who hates everyone around me and hate my co-workers. Should I pay less in tax? Tax policy should be based on our collective values regarding such things as what incentives we want and to what extent we want redistribution. It should not be related to punishing people who are enjoying their lives.
- jondubois 9y ago
  In my books, money that you get from dividend or rent payments is not 'earned income'. I don't think it should be classified as income; it should get its own category and be taxed much higher. We don't want to encourage people to sit around and do nothing just because they happened to decide to buy a few Apple or Amazon shares 20 years ago. Maybe the tax rate would be correlated to happiness, but that's OK; maybe it will average out the human experience... That seems fair.
  - troydavis 9y ago
    > We don't want to encourage people to sit around and do nothing just because they happened to decide to buy a few Apple or Amazon shares 20 years ago. That’s an inaccurate summary of the current consensus about capital gains tax policy. The logic for a lower capital gains rate is: * people with capital should be incentivized to do something with it (other than put it in a mattress, ie, in cash/money markets) * the person with capital probably has relatively limited ways to deploy it themselves. Someone with a retirement account probably can’t, and usually shouldn’t, take that $50,000 and start a business with it (even though that income would generate compensation for them, which you’d propose taxing at a lower rate). At the other extreme, someone with a huge business would have reinvested the profits into the huge business (instead of taking a distribution and trying to invest it) if they thought that was the most productive use of the capital * given that not all holders of capital can deploy it productively themselves, and that we don’t want them to sit on it (or deploy it poorly because they’d pay higher taxes if they didn’t), the next best thing is to encourage them to provide that capital to others. Experts argue how much lower the capital gains rate should be, or even that capital gains and income should be taxed equally, but basically no experts[1] argue for a higher rate, nor that a lower or equal rate encourages “people to sit around.” Of course, there’s a chance that you and, say, 1% of mainstream economists are on to something. [1]: Don’t trust me; form your own opinion: https://www.google.com/search?q=does+anyone+argue+that+capital+gains+tax+should+be+higher+than+income https://www.google.com/search?q=does+anyone+argue+that+capit...
    - dragonwriter 9y ago
      > The logic for a lower capital gains rate is We don't actually have a lower capital gains rate, we have a lower long term capital gains rate, which, insofar as it has logic beyond “its the kind of income that predominates among the superrich”, seems to be loosely grounded in the fact that income earned over a period greater than one year would be overtaxed if treated as simole current-year income in a progressive tax system. Of course, a simple solution to this is simply to tax long-term gains as income but allow either advanced or deferred (or both) recognition of income, regardless of source, with some defined quantitative limits.
eighthnate 9y ago
> But then if you earn $200 million per year, you still only pay 50% tax - If you are making $200 million, then you are most likely paying 20% in taxes as you probably have incorporated and you are being taxed at a capital gains rate. Hell if you are making that much, you could incorporate in a foreign nation with little to no taxes and then refuse to repatriate the earnings and just loan yourself money the money at 1% interest rate. Loans aren't taxed. The largest banks like UBS, Bank of America, HSBC, JP Morgan, etc have floors dedicated to wealth management who will help you dodge taxes.
theli0nheart 9y ago
> The most infuriating thing about the current tax system is that the magical $150K number (where the tax rate suddenly levels off) is in fact the exact point after which earning money starts to get easier. This is exactly the point when the tax rates should start really sloping up - Not the point where they should level off! Can you reference the study or data supporting the assertion that making money gets easier after $150k per year? Tangentially, income is (rightly, IMO) not based on effort or how easy the work is. I could punch the wall all day long, and end every day with bruised, bleeding knuckles, but even though that's hard work, no one's going to pay me much for that. Income is generally based on the value other's perceive because of one's effort.

projectramo 9y ago

I agree with some of the general sentiment here but what I don't understand is why how hard one works or how much toll it takes should have anything to do with taxation. For instance, suppose you're a happy go lucky guy who doesn't need much sleep and have a happy home life, and I am a grumpy dude who hates everyone around me and hate my co-workers. Should I pay less in tax? Tax policy should be based on our collective values regarding such things as what incentives we want and to what extent we want redistribution. It should not be related to punishing people who are enjoying their lives.

jondubois 9y ago
In my books, money that you get from dividend or rent payments is not 'earned income'. I don't think it should be classified as income; it should get its own category and be taxed much higher. We don't want to encourage people to sit around and do nothing just because they happened to decide to buy a few Apple or Amazon shares 20 years ago. Maybe the tax rate would be correlated to happiness, but that's OK; maybe it will average out the human experience... That seems fair.
- troydavis 9y ago
  > We don't want to encourage people to sit around and do nothing just because they happened to decide to buy a few Apple or Amazon shares 20 years ago. That’s an inaccurate summary of the current consensus about capital gains tax policy. The logic for a lower capital gains rate is: * people with capital should be incentivized to do something with it (other than put it in a mattress, ie, in cash/money markets) * the person with capital probably has relatively limited ways to deploy it themselves. Someone with a retirement account probably can’t, and usually shouldn’t, take that $50,000 and start a business with it (even though that income would generate compensation for them, which you’d propose taxing at a lower rate). At the other extreme, someone with a huge business would have reinvested the profits into the huge business (instead of taking a distribution and trying to invest it) if they thought that was the most productive use of the capital * given that not all holders of capital can deploy it productively themselves, and that we don’t want them to sit on it (or deploy it poorly because they’d pay higher taxes if they didn’t), the next best thing is to encourage them to provide that capital to others. Experts argue how much lower the capital gains rate should be, or even that capital gains and income should be taxed equally, but basically no experts[1] argue for a higher rate, nor that a lower or equal rate encourages “people to sit around.” Of course, there’s a chance that you and, say, 1% of mainstream economists are on to something. [1]: Don’t trust me; form your own opinion: https://www.google.com/search?q=does+anyone+argue+that+capital+gains+tax+should+be+higher+than+income https://www.google.com/search?q=does+anyone+argue+that+capit...
  - dragonwriter 9y ago
    > The logic for a lower capital gains rate is We don't actually have a lower capital gains rate, we have a lower long term capital gains rate, which, insofar as it has logic beyond “its the kind of income that predominates among the superrich”, seems to be loosely grounded in the fact that income earned over a period greater than one year would be overtaxed if treated as simole current-year income in a progressive tax system. Of course, a simple solution to this is simply to tax long-term gains as income but allow either advanced or deferred (or both) recognition of income, regardless of source, with some defined quantitative limits.

eighthnate 9y ago

> But then if you earn $200 million per year, you still only pay 50% tax - If you are making $200 million, then you are most likely paying 20% in taxes as you probably have incorporated and you are being taxed at a capital gains rate. Hell if you are making that much, you could incorporate in a foreign nation with little to no taxes and then refuse to repatriate the earnings and just loan yourself money the money at 1% interest rate. Loans aren't taxed. The largest banks like UBS, Bank of America, HSBC, JP Morgan, etc have floors dedicated to wealth management who will help you dodge taxes.

theli0nheart 9y ago

> The most infuriating thing about the current tax system is that the magical $150K number (where the tax rate suddenly levels off) is in fact the exact point after which earning money starts to get easier. This is exactly the point when the tax rates should start really sloping up - Not the point where they should level off! Can you reference the study or data supporting the assertion that making money gets easier after $150k per year? Tangentially, income is (rightly, IMO) not based on effort or how easy the work is. I could punch the wall all day long, and end every day with bruised, bleeding knuckles, but even though that's hard work, no one's going to pay me much for that. Income is generally based on the value other's perceive because of one's effort.