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My tax plan is to eliminate income tax up to $90,000. After that, income is taxed at 100%. The government awards tax credits for everyone making less than that,

My tax plan is to eliminate income tax up to $90,000. After that, income is taxed at 100%. The government awards tax credits for everyone making less than that, so that everyone's salary + tax credits = $90,000. "But wait," you say "How will we incentivize entrepreneurs if they can't earn more money?" For everyone making over $90,000 (approx. 11% of the population), their pretax salary is used to assign them national ranking that's publicly available, much like a ladder tournament, which could be subdivided into regions, industries, etc. The rationale for this system is that we use one system - money - for two unrelated social purposes: reducing suffering and establishing status which incentivizes production. In my system, these purposes are less coupled. The $90,000 number was calculated by dividing the total US income by the number of workers, so this would need to be adjusted yearly. If this system was applied globally, the average salary would be $25,000 which is quite a step up for billions of people. It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class.

yummyfajitas 16y ago
Ok - if your system is ever enacted, I'm cutting my work hours back by 50% or more. I'm also hoping that not everyone does this, because if everyone did, there would be far less than $90k/person floating around. But that won't happen, right? It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class. This assumes that the total cost of providing the same middle-class resources to everyone in the world is equal to the present marginal cost of doing so.
- alsomike 16y ago
  That's fine, you'd get 50% of the tax credit.
- joelhaus 16y ago
  Sounds a little bit like the NFL: http://www.realfootball365.com/articles/nfl/14905 http://www.realfootball365.com/articles/nfl/14905 The major sports leagues in the U.S. (football/basketball/baseball) are definitely an interesting microcosm of various economic systems.
getsat 16y ago
You might want to go read Atlas Shrugged.
LiveTheDream 16y ago
If the plan provides for everyone to earn 90k regardless of what they actually do, there is no incentive to be productive at all, (much less to be productive enough to account for those who produce very little). Having my name on a list as the X most productive person is not incentive. Being able to spend the money I earn, is.
- nostrademons 16y ago
  What do you need to spend money on that you can't afford with $90K? And why do you want to buy it over something that you could afford? In my experience, virtually everything that falls into that category is some sort of status symbol. The grandparent poster is suggesting replacing these implicit status symbols with an explicit one. The part about his proposal that I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years, and then do something more interesting during that time. But if you're earning $90K regardless, that wouldn't matter, because you'd be able to do the more interesting stuff anyway. Actually, that leads to the real problem in his proposal: you lose the information-carrying capacity of money. I'm basically ambivalent about most of my income over a number that's a lot less than $90K; I don't spend it anyway. But if I'm faced with two jobs that look equally interesting, I'll take the one that pays more; the additional money is a proxy for how much that business is valued by the marketplace, and I'd rather work on things that will make lots of people happy. Same with when I start a business: there're lots of projects that are interesting, but profit is a way of telling which ones are interesting and useful to others. OTOH, a stack ranking does that as well. The problem with the stack ranking is that you can't pass along that surplus down the value chain. So, for example, if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to, because the government would take the money you would otherwise have paid the graphic designer.
  - alsomike 16y ago
    > I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years I was thinking that people could work part-time and earn 50% of standard income. Median household income is around $50k right now, so this is a decent standard of living. > if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to A two-person household where both members worked full time would be making 3.6x the current median household income, which is way more than they need. This surplus could be used as investment capital, where it would be distributed and decentralized, so it would be much easier to do Kickstarter-style funding. If we accept $75k at the point where money stops having an impact on happiness, individuals would have 20% above that line to play with for those kinds of things. Essentially, the stack ranking converts your surplus productivity into status for you, and distributed evenly to your friends and neighbors, who have the power to return it to you if they think your project is socially or economically valuable. Some good points though, especially the part about profit as an index of what makes people happy. The problem with our current system is that this is only true if your profits come from people who make less than $75k. 40% of consumer spending is driven by people in the top 10% ($82,500 annual income), so it's fair to say that that spending is misallocated and doesn't contribute to overall happiness.
raquo 16y ago
And what would you do with existing billionaires? Rip them of their money, like when USSR was formed? Or leave them their money to freeze the status quo forever?
gjm11 16y ago
> The government awards tax credits for everyone making less than that [...] > [...] dividing the total US income by the number of workers [...] So, for that $90k figure to be attainable, you need those who aren't "workers" not to get any of this money. Which means that becoming a "worker" will suddenly mean getting an extra $90k/year, whatever the job. Which means that there will almost certainly suddenly be a lot more "workers". Which means you can't manage $90k/year after all. Also: Your system relies on taking away a great deal of money from rich people in order to give it to a larger number of people who would otherwise be much less well off. I have no problem at all with this as a general approach, but the more you do it the harder those rich people are going to try to avoid paying; and rich people can generally afford a lot of expert assistance with not paying, arrange for a great deal of lobbying to get the rules changed, etc. -- which means that you probably can't get nearly as much money out of them as just looking at their salaries suggests. For instance, duh, suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year. Suddenly 90% of that tax revenue has gone. Whoops, everyone else's annual salary is now $9k/year. Also: as others have pointed out, it is ... not obvious ... that being given a low number in some official government ranking would be as strong a motivator as actually getting rich. Yes, one reason why people want to get rich is because wealth brings high status. But there is some reason to think that they also want to get rich because wealth brings large houses, good food, nice holidays, fast cars, and all the other stuff that one can buy if one has enough money.
- alsomike 16y ago
  > Which means that there will almost certainly suddenly be a lot more "workers". You mean a low unemployment rate? > Your system relies on taking away a great deal of money from rich people... the more you do it the harder those rich people are going to try to avoid paying Not really, no. Money in excess of $90k isn't confiscated, it's still used to purchase status just as it is today. The only difference is that it's purchased from the government instead of BMW, De Beers, etc. Status markers are essentially arbitrary anyway, why not just have a single number? It's much more efficient. > suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year They could do that, and it would lower everyone's rank. This would cause some people to quit those jobs and find other jobs that offered more status, lowering supply and causing the price to go up again. If salaries drop because of market forces, the savings would be used to invest in the business: hiring other employees, improving operating efficiency, R&D, etc. > they also want to get rich because wealth brings large houses, etc. Any income above $75k doesn't contribute to personal happiness, and standard income is already 20% above that. Luxury goods don't contribute to happiness, they're just a wasteful and inefficient way of signaling status. That money that could be used to improve lives or fund innovation.
othermaciej 16y ago
I see that you are trying to get in the spirit of coming up with the "bad version". Communism has been tried before, and it didn't work very well.
- xentronium 16y ago
  Like, say, China?
  - encoderer 16y ago
    You think the chinese system -- with hundreds of millions of people living in squalor -- works?
    - Unseelie 16y ago
      It certainly functions.
      - Ntagg 16y ago
        Lots of functioninal things lower quality of life. That's not a very rigid or useful test.
  - JoachimSchipper 16y ago
    China is not really a communist country as originally envisioned. Certainly, there are large disparities in income between the party elite/entrepreneurs and some random farmer.
    - xentronium 16y ago
      That's true; however, to claim communism does not work whereas it works better than anything else is a little bit arrogant.
      - chc 16y ago
        You're not offering any real evidence for your side, so it seems pretty arrogant to expect anyone to give you any credence. You claim it "works better than anything else," while citing a country that has brought a fraction of its population out of absolute squalor by abandoning communist ideology — that is very specious.
sitmack 16y ago
In the Scott Adams Crazyverse(tm) this is a good-bad idea.
Ntagg 16y ago
The laffer curve would indicate that people would stop working and contributing once they stop getting incentivized. I would stop every year, once I hit the threshold.
billybob 16y ago
Completely flattening income is a horrible idea. Everyone would try to get the easiest job possible, because the income is the same. Yes, some people do their job because they love it. But most people bust their butt so they can make a good living. "But in my system, everyone makes a good living," you say. What about inherently scarce resources? There is limited beachside property. Who will get it? Currently, busting your tail through medical school gives you a better chance than dropping out of high school. How would you decide when everyone makes the same? And the income equality would be an illusion, anyway: some skills are inherently more valuable than others. Transactions would just go off the grid. You need a roofing job done? The roofer is all booked up. Oh, you can barter with your web design skills? Well, that's more valuable than the guy who offered yard service, so you win. But darn if bartering isn't awkward - if only we had some system to store this inherent value...

yummyfajitas 16y ago

Ok - if your system is ever enacted, I'm cutting my work hours back by 50% or more. I'm also hoping that not everyone does this, because if everyone did, there would be far less than $90k/person floating around. But that won't happen, right? It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class. This assumes that the total cost of providing the same middle-class resources to everyone in the world is equal to the present marginal cost of doing so.

alsomike 16y ago
That's fine, you'd get 50% of the tax credit.
joelhaus 16y ago
Sounds a little bit like the NFL: http://www.realfootball365.com/articles/nfl/14905 http://www.realfootball365.com/articles/nfl/14905 The major sports leagues in the U.S. (football/basketball/baseball) are definitely an interesting microcosm of various economic systems.

getsat 16y ago

You might want to go read Atlas Shrugged.

LiveTheDream 16y ago

If the plan provides for everyone to earn 90k regardless of what they actually do, there is no incentive to be productive at all, (much less to be productive enough to account for those who produce very little). Having my name on a list as the X most productive person is not incentive. Being able to spend the money I earn, is.

nostrademons 16y ago
What do you need to spend money on that you can't afford with $90K? And why do you want to buy it over something that you could afford? In my experience, virtually everything that falls into that category is some sort of status symbol. The grandparent poster is suggesting replacing these implicit status symbols with an explicit one. The part about his proposal that I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years, and then do something more interesting during that time. But if you're earning $90K regardless, that wouldn't matter, because you'd be able to do the more interesting stuff anyway. Actually, that leads to the real problem in his proposal: you lose the information-carrying capacity of money. I'm basically ambivalent about most of my income over a number that's a lot less than $90K; I don't spend it anyway. But if I'm faced with two jobs that look equally interesting, I'll take the one that pays more; the additional money is a proxy for how much that business is valued by the marketplace, and I'd rather work on things that will make lots of people happy. Same with when I start a business: there're lots of projects that are interesting, but profit is a way of telling which ones are interesting and useful to others. OTOH, a stack ranking does that as well. The problem with the stack ranking is that you can't pass along that surplus down the value chain. So, for example, if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to, because the government would take the money you would otherwise have paid the graphic designer.
- alsomike 16y ago
  > I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years I was thinking that people could work part-time and earn 50% of standard income. Median household income is around $50k right now, so this is a decent standard of living. > if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to A two-person household where both members worked full time would be making 3.6x the current median household income, which is way more than they need. This surplus could be used as investment capital, where it would be distributed and decentralized, so it would be much easier to do Kickstarter-style funding. If we accept $75k at the point where money stops having an impact on happiness, individuals would have 20% above that line to play with for those kinds of things. Essentially, the stack ranking converts your surplus productivity into status for you, and distributed evenly to your friends and neighbors, who have the power to return it to you if they think your project is socially or economically valuable. Some good points though, especially the part about profit as an index of what makes people happy. The problem with our current system is that this is only true if your profits come from people who make less than $75k. 40% of consumer spending is driven by people in the top 10% ($82,500 annual income), so it's fair to say that that spending is misallocated and doesn't contribute to overall happiness.

raquo 16y ago

And what would you do with existing billionaires? Rip them of their money, like when USSR was formed? Or leave them their money to freeze the status quo forever?

gjm11 16y ago

> The government awards tax credits for everyone making less than that [...] > [...] dividing the total US income by the number of workers [...] So, for that $90k figure to be attainable, you need those who aren't "workers" not to get any of this money. Which means that becoming a "worker" will suddenly mean getting an extra $90k/year, whatever the job. Which means that there will almost certainly suddenly be a lot more "workers". Which means you can't manage $90k/year after all. Also: Your system relies on taking away a great deal of money from rich people in order to give it to a larger number of people who would otherwise be much less well off. I have no problem at all with this as a general approach, but the more you do it the harder those rich people are going to try to avoid paying; and rich people can generally afford a lot of expert assistance with not paying, arrange for a great deal of lobbying to get the rules changed, etc. -- which means that you probably can't get nearly as much money out of them as just looking at their salaries suggests. For instance, duh, suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year. Suddenly 90% of that tax revenue has gone. Whoops, everyone else's annual salary is now $9k/year. Also: as others have pointed out, it is ... not obvious ... that being given a low number in some official government ranking would be as strong a motivator as actually getting rich. Yes, one reason why people want to get rich is because wealth brings high status. But there is some reason to think that they also want to get rich because wealth brings large houses, good food, nice holidays, fast cars, and all the other stuff that one can buy if one has enough money.

alsomike 16y ago
> Which means that there will almost certainly suddenly be a lot more "workers". You mean a low unemployment rate? > Your system relies on taking away a great deal of money from rich people... the more you do it the harder those rich people are going to try to avoid paying Not really, no. Money in excess of $90k isn't confiscated, it's still used to purchase status just as it is today. The only difference is that it's purchased from the government instead of BMW, De Beers, etc. Status markers are essentially arbitrary anyway, why not just have a single number? It's much more efficient. > suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year They could do that, and it would lower everyone's rank. This would cause some people to quit those jobs and find other jobs that offered more status, lowering supply and causing the price to go up again. If salaries drop because of market forces, the savings would be used to invest in the business: hiring other employees, improving operating efficiency, R&D, etc. > they also want to get rich because wealth brings large houses, etc. Any income above $75k doesn't contribute to personal happiness, and standard income is already 20% above that. Luxury goods don't contribute to happiness, they're just a wasteful and inefficient way of signaling status. That money that could be used to improve lives or fund innovation.

othermaciej 16y ago

I see that you are trying to get in the spirit of coming up with the "bad version". Communism has been tried before, and it didn't work very well.

xentronium 16y ago
Like, say, China?
- encoderer 16y ago
  You think the chinese system -- with hundreds of millions of people living in squalor -- works?
  - Unseelie 16y ago
    It certainly functions.
    - Ntagg 16y ago
      Lots of functioninal things lower quality of life. That's not a very rigid or useful test.
- JoachimSchipper 16y ago
  China is not really a communist country as originally envisioned. Certainly, there are large disparities in income between the party elite/entrepreneurs and some random farmer.
  - xentronium 16y ago
    That's true; however, to claim communism does not work whereas it works better than anything else is a little bit arrogant.
    - chc 16y ago
      You're not offering any real evidence for your side, so it seems pretty arrogant to expect anyone to give you any credence. You claim it "works better than anything else," while citing a country that has brought a fraction of its population out of absolute squalor by abandoning communist ideology — that is very specious.

sitmack 16y ago

In the Scott Adams Crazyverse(tm) this is a good-bad idea.

Ntagg 16y ago

The laffer curve would indicate that people would stop working and contributing once they stop getting incentivized. I would stop every year, once I hit the threshold.

billybob 16y ago

Completely flattening income is a horrible idea. Everyone would try to get the easiest job possible, because the income is the same. Yes, some people do their job because they love it. But most people bust their butt so they can make a good living. "But in my system, everyone makes a good living," you say. What about inherently scarce resources? There is limited beachside property. Who will get it? Currently, busting your tail through medical school gives you a better chance than dropping out of high school. How would you decide when everyone makes the same? And the income equality would be an illusion, anyway: some skills are inherently more valuable than others. Transactions would just go off the grid. You need a roofing job done? The roofer is all booked up. Oh, you can barter with your web design skills? Well, that's more valuable than the guy who offered yard service, so you win. But darn if bartering isn't awkward - if only we had some system to store this inherent value...