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"FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them." Allow me to be the first - with both a ph
by rsync 4y ago
"FWIW, I've never actually heard anyone complain about state taxes in California or consider moving because of them."
Allow me to be the first - with both a philosophical and a practical critique.
First, philosophical: The highest marginal tax rate in California is 13.3% which, combined with the maximum marginal federal rate of 37%, crosses an anchor point, or threshold, that I mentally hold of greater than half.
You see, I consider tax rates to be largely arbitrary - I cannot affix any particular value judgement on, say, 18% vs 22% vs 27% tax rates. They seem equally reasonable, on principle ... they seem arbitrary to me ...
... until they are greater than half.[1] This is my personal feeling.
Second, a practical critique: I have no problem with high tax rates - provided I get high value for my taxpayer dollar. If the trains all run on time and the power is on and everything looks like Zurich (the Canton) then please, do indeed, subject me to high tax rates. Conversely, if things look like California circa 2022 I'd be reasonable content with (some lower, obviously arbitrary) tax rate.
As it stands, we get the worst of both worlds: relatively high (globally!) tax rates, no trains at all (never mind being on time) and spotty electricity ... among other things.
[1] Cue the misunderstood, misinterpreted retelling of sky-high marginal tax rates from the end of world war 2. These were war profiteering policies and had nothing to do with policies of progressive taxation as we think of them. It is incorrect, for instance, to compare the 95% excess profits tax of 1943 with tax rates in our modern era: https://en.wikipedia.org/wiki/Excess_profits_tax https://en.wikipedia.org/wiki/Excess_profits_tax
- bhupy 4y agoGenerally agree with most of what you're saying, it's the Tiebout model (https://en.wikipedia.org/wiki/Tiebout_model https://en.wikipedia.org/wiki/Tiebout_model). > The model holds that if municipalities offered varying baskets of goods (government services) at a variety of prices (tax rates), that people with different personal valuations of these services and prices would move from one local community to another which maximizes their personal utility. My only quip is that the marginal rate doesn't apply on every single dollar, so while it's true that after a certain dollar threshold, every incremental dollar is taxed at greater than half, your net effective rate remains well below half, for whatever that's worth.
- pyuser583 4y agoA meaningful number for income taxes is 40%. Any thing higher and you run a good chance of taking in less revenue.
- solidsnack9000 4y agoIt is worth mentioning that the highest income tax rate in Switzerland -- cantonal + federal -- is about 20%.
- snapplebobapple 4y agoHave you tried thinking about things from a cost/benefit perspective? It's still somewhat arbitrary because you only have a rough idea of your utility function and you aren't going to run all the numbers, but it's a good framework (it also totally justifies progressive taxation because network effects of public goods and services are likely much higher if you have higher income)