4 ms·

This is why high progressive tax rates, let alone high marginal tax rates, are justifiable. The less you earn, the lower a percentage of your earnings you can a

This is why high progressive tax rates, let alone high marginal tax rates, are justifiable. The less you earn, the lower a percentage of your earnings you can afford to lose before having to make drastic lifestyle changes. However, relatively low on the absolute income range for Western countries, you reach a point where you could lose 90% of your income, live in a high-cost-of-living area, and still experience negligible change in your circumstances. Tax rates should be based on analyzing where that point is.

giantg2 1y ago
Tax rates should also be based on what the public expenditure need is, not just maximum revenue.
- Retric 1y ago
  That’s true up until the point of budget deficit.
- h2zizzle 1y ago
  The redistributive effect of taxes is a feature, not a bug. Inequality distorts political and social dynamics. One of the functions of taxation is to make rich people less rich, and we shouldn't run from that.
  - giantg2 1y ago
    It doesn't seem like taxes are a cure for inequality. At least I don't see any examples of it.
    - Retric 1y ago
      The goal is to mitigate inequality not eliminate it. Someone making 10x as much as the average person has minimal impact, 100x isn’t a big deal, but you keep adding zeros especially with passive income and there’s significant repercussions. US inequality increased significantly after the top tax rates, long term capital gains, etc declined significantly. There’s no question those are related, it was explicitly the intended effect.
      - giantg2 1y ago
        It doesn't seem to have the intended effects in other countries. Income inequality has gone up in other places such as Europe too. The real driver seems to be the modernization of jobs with the job types moving from secondary to tertiary types, especially knowledge work. The main reason the wealth is uneven here more so than in other countries is because of the big tech companies that we have and others don't. All those unrealized gains from company ownership are the main driver of the extra 20-30% the top people have vs the top people of other countries.
        Retric 1y ago
        Again it’s a question of scale. There’s a bunch of countries with higher levels of wealth inequality than the US like Zambia and Russia so it’s the result of lots of forces. Wealth inequality can increase from trends which are net positive but that doesn’t change the fact it’s a net negative. Thus, changes to the tax code specifically designed to increase wealth inequality working shouldn’t be surprising even if other factors are also in play.
lotsofpulp 1y ago
I find earned income tax is never justifiable. Working should never cost you money. Marginal land value tax rates do make sense though (and marginal sales tax rates, but that’s harder to implement). The current situation of low land value tax rates and high earned income tax rates leads to two old people living in excessively large lots while two young working people give up goals of having kids because they don’t want to raise them in a 1,000 square foot rental they don’t consider stable enough.
- 47282847 1y ago
  > Working should never cost you money. And that’s the case as long as the income tax is at or less than 100%. Income taxes could well be collected from employers directly and never reach you (like some European countries do for roughly 50% taxes due). Ultimately what counts is how much your employment costs. Psychologically, it then may not feel like you are paying anything, because you don’t. You working supports public infrastructure for public benefit (which includes you again). Prefer to pay no taxes but having to build your own roads? Good luck with that.
  - dragonwriter 1y ago
    > And that’s the case as long as the income tax is at or less than 100%. No, its true as long as taxes on income plus the necessary-but-non-deductible expenses associated with maintaining the job that would not be required otherwise are less than the pay for doing the job. But income taxes aren't the only taxes on income (payroll taxes exist), and costs of work (added wardrobe costs imposed by dress codes and expectations, commute costs, added childcare costs) are real.
    - 47282847 1y ago
      Hardly anyone would work if the downsides outweighed their personal benefit. Actually, some people decide not to. It’s a trade-off that I’m personally happy to take by working. I enjoy my benefits. Feel free to quit! If it would cost me more than I gain from it, your original point, I would certainly do that.

giantg2 1y ago

Tax rates should also be based on what the public expenditure need is, not just maximum revenue.

Retric 1y ago
That’s true up until the point of budget deficit.
h2zizzle 1y ago
The redistributive effect of taxes is a feature, not a bug. Inequality distorts political and social dynamics. One of the functions of taxation is to make rich people less rich, and we shouldn't run from that.
- giantg2 1y ago
  It doesn't seem like taxes are a cure for inequality. At least I don't see any examples of it.
  - Retric 1y ago
    The goal is to mitigate inequality not eliminate it. Someone making 10x as much as the average person has minimal impact, 100x isn’t a big deal, but you keep adding zeros especially with passive income and there’s significant repercussions. US inequality increased significantly after the top tax rates, long term capital gains, etc declined significantly. There’s no question those are related, it was explicitly the intended effect.
    - giantg2 1y ago
      It doesn't seem to have the intended effects in other countries. Income inequality has gone up in other places such as Europe too. The real driver seems to be the modernization of jobs with the job types moving from secondary to tertiary types, especially knowledge work. The main reason the wealth is uneven here more so than in other countries is because of the big tech companies that we have and others don't. All those unrealized gains from company ownership are the main driver of the extra 20-30% the top people have vs the top people of other countries.
      - Retric 1y ago
        Again it’s a question of scale. There’s a bunch of countries with higher levels of wealth inequality than the US like Zambia and Russia so it’s the result of lots of forces. Wealth inequality can increase from trends which are net positive but that doesn’t change the fact it’s a net negative. Thus, changes to the tax code specifically designed to increase wealth inequality working shouldn’t be surprising even if other factors are also in play.

lotsofpulp 1y ago

I find earned income tax is never justifiable. Working should never cost you money. Marginal land value tax rates do make sense though (and marginal sales tax rates, but that’s harder to implement). The current situation of low land value tax rates and high earned income tax rates leads to two old people living in excessively large lots while two young working people give up goals of having kids because they don’t want to raise them in a 1,000 square foot rental they don’t consider stable enough.

47282847 1y ago
> Working should never cost you money. And that’s the case as long as the income tax is at or less than 100%. Income taxes could well be collected from employers directly and never reach you (like some European countries do for roughly 50% taxes due). Ultimately what counts is how much your employment costs. Psychologically, it then may not feel like you are paying anything, because you don’t. You working supports public infrastructure for public benefit (which includes you again). Prefer to pay no taxes but having to build your own roads? Good luck with that.
- dragonwriter 1y ago
  > And that’s the case as long as the income tax is at or less than 100%. No, its true as long as taxes on income plus the necessary-but-non-deductible expenses associated with maintaining the job that would not be required otherwise are less than the pay for doing the job. But income taxes aren't the only taxes on income (payroll taxes exist), and costs of work (added wardrobe costs imposed by dress codes and expectations, commute costs, added childcare costs) are real.
  - 47282847 1y ago
    Hardly anyone would work if the downsides outweighed their personal benefit. Actually, some people decide not to. It’s a trade-off that I’m personally happy to take by working. I enjoy my benefits. Feel free to quit! If it would cost me more than I gain from it, your original point, I would certainly do that.