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> "Regular people pay higher marginal rates than rich people, but other than that it's a progressive tax system" is basically the opposite of a progressive tax

> "Regular people pay higher marginal rates than rich people, but other than that it's a progressive tax system" is basically the opposite of a progressive tax system. Not really what I said. If richer people progressively pay more tax for the bottom 99% of the population, that's arguably still a progressive system. The top 1% not paying more feels more like a problem in the implementation of what is otherwise a fairly progressive setup. I don't think I believe that poor people pay the highest marginal income tax rates given that some poor people pay none and all rich people have the amt. Other taxes, like sales tax, might make that true. A flat tax is more regressive than a progressive tax with loopholes cut out.

AnthonyMouse 5y ago
> Not really what I said. If richer people progressively pay more tax for the bottom 99% of the population, that's arguably still a progressive system. Except that that isn't what happens for the people at the very top, i.e. the investment class. The capital gains rate (paid by billionaires) is lower than the top earned income rate (paid by millionaires) and billionaires and international corporations use tax avoidance strategies to reduce the amount of income they pay tax on to begin with. A flat tax can't be avoided in the same ways. > I don't think I believe that poor people pay the highest marginal income tax rates given that some poor people pay none and all rich people have the amt. You're confusing marginal rates with effective rates. Suppose you make $15,000/year and get $5000/year in government assistance. But the assistance programs phase out at various rates that add together to 80%. If you make an extra dollar, you lose $.25 of food assistance, $.30 of housing assistance and $.25 of childcare assistance, something like that. Because those benefits phase out. The government takes 80% of the marginal dollar. Even if your "income tax bracket" is 0%, your marginal tax rate is 80%. This is more than some higher income person paying a marginal rate of 25% or 35%. Your effective tax rate is -33%, because you made $15,000 and then "paid" -$5000 to the government, i.e. received $5000 in assistance. Now compare this with a UBI that has no phase out and a 30% flat tax rate. You make $15,000, receive $12,000 UBI, pay $4500 (30% of the $15,000) in tax, so you net $7500 from the government. Your marginal rate is 30%, your effective rate is -50%. This is more progressive than the status quo on both metrics, despite being a "flat tax." Because all "flat tax" means is that everybody pays the same marginal rate, whereas any rational definition of "progressive" implies that lower income people are paying lower effective rates.

AnthonyMouse 5y ago

> Not really what I said. If richer people progressively pay more tax for the bottom 99% of the population, that's arguably still a progressive system. Except that that isn't what happens for the people at the very top, i.e. the investment class. The capital gains rate (paid by billionaires) is lower than the top earned income rate (paid by millionaires) and billionaires and international corporations use tax avoidance strategies to reduce the amount of income they pay tax on to begin with. A flat tax can't be avoided in the same ways. > I don't think I believe that poor people pay the highest marginal income tax rates given that some poor people pay none and all rich people have the amt. You're confusing marginal rates with effective rates. Suppose you make $15,000/year and get $5000/year in government assistance. But the assistance programs phase out at various rates that add together to 80%. If you make an extra dollar, you lose $.25 of food assistance, $.30 of housing assistance and $.25 of childcare assistance, something like that. Because those benefits phase out. The government takes 80% of the marginal dollar. Even if your "income tax bracket" is 0%, your marginal tax rate is 80%. This is more than some higher income person paying a marginal rate of 25% or 35%. Your effective tax rate is -33%, because you made $15,000 and then "paid" -$5000 to the government, i.e. received $5000 in assistance. Now compare this with a UBI that has no phase out and a 30% flat tax rate. You make $15,000, receive $12,000 UBI, pay $4500 (30% of the $15,000) in tax, so you net $7500 from the government. Your marginal rate is 30%, your effective rate is -50%. This is more progressive than the status quo on both metrics, despite being a "flat tax." Because all "flat tax" means is that everybody pays the same marginal rate, whereas any rational definition of "progressive" implies that lower income people are paying lower effective rates.