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I openly admit I am a republican but I have never understood why there are not more tax brackets. A person making 100k per year is not even close to the same as

I openly admit I am a republican but I have never understood why there are not more tax brackets. A person making 100k per year is not even close to the same as a person making 100m per year but are taxed at the same rate.

wafflesraccoon 8y ago
I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income?
- noobiemcfoob 8y ago
  Because income tax in the first place is a compromise with people who don't want that system at all. So you get a solution that isn't what anyone wants.
- LyndsySimon 8y ago
  What we have now is effectively "a function to calculate your taxes based off your total income" - it's just that the function treats different portions of income differently.
- dragonwriter 8y ago
  > I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income? You could use a function with a smooth derivative, and since a table is used in application it would have no effect on practical complexity of tax prep, though it would make intuitive grasp even harder (and it's already bad.)
AnimalMuppet 8y ago
Hmm. Maybe use a log scale? Every factor of 10 in income, the incremental tax rate goes up a percent or three. If 35% is the top now, and starts at $100K (numbers made up because I refuse to grovel through the IRS code in order to make an HN post), and if the delta is 3% per factor of 10, then we get 38% at $1M, 41% at $10M, 44% at $100M, 47% at $1B (income, per year). I'll stop there, because I'm not sure anyone has ever reported $10B income in one year ever in history. If you made the delta 9%, that would get you 44% at $1M, 53% at 10M, 62% at $100M, and 71% at $1B. This gets you in the neighborhood of Ocasio-Cortez's idea, but without one big step to get you there. (I suspect that it would also raise considerably less money than her plan...)
- tracker1 8y ago
  The problem is that enough types of activity are excluded from taxation. It would be better to have a 0.25% margin tax on all financial transactions or currency transfers. Nobody could avoid it, and some of the micro-trades wouldn't happen as much. Yes, then you still have the cash loophole, but most people aren't using cash.

wafflesraccoon 8y ago

I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income?

noobiemcfoob 8y ago
Because income tax in the first place is a compromise with people who don't want that system at all. So you get a solution that isn't what anyone wants.
LyndsySimon 8y ago
What we have now is effectively "a function to calculate your taxes based off your total income" - it's just that the function treats different portions of income differently.
dragonwriter 8y ago
> I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income? You could use a function with a smooth derivative, and since a table is used in application it would have no effect on practical complexity of tax prep, though it would make intuitive grasp even harder (and it's already bad.)

AnimalMuppet 8y ago

Hmm. Maybe use a log scale? Every factor of 10 in income, the incremental tax rate goes up a percent or three. If 35% is the top now, and starts at $100K (numbers made up because I refuse to grovel through the IRS code in order to make an HN post), and if the delta is 3% per factor of 10, then we get 38% at $1M, 41% at $10M, 44% at $100M, 47% at $1B (income, per year). I'll stop there, because I'm not sure anyone has ever reported $10B income in one year ever in history. If you made the delta 9%, that would get you 44% at $1M, 53% at 10M, 62% at $100M, and 71% at $1B. This gets you in the neighborhood of Ocasio-Cortez's idea, but without one big step to get you there. (I suspect that it would also raise considerably less money than her plan...)

tracker1 8y ago
The problem is that enough types of activity are excluded from taxation. It would be better to have a 0.25% margin tax on all financial transactions or currency transfers. Nobody could avoid it, and some of the micro-trades wouldn't happen as much. Yes, then you still have the cash loophole, but most people aren't using cash.