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Broad based benefits tend to receive more public support. Just tax those with high incomes to get it back. Otherwise the bumpy effective marginal tax thresholds

Broad based benefits tend to receive more public support. Just tax those with high incomes to get it back. Otherwise the bumpy effective marginal tax thresholds (which increase and the decrease again as income increases) end up incentivising gaming the system by shifting when income is realised. Presumably the optimal strategy if you have retirement income within the range where you face a 15% clawback might be to withdraw extra income one year so that you can avoid the clawback the following year, since the higher marginal tax rate would be less than the clawback saved.

andrekandre 24d ago
> Just tax those with high incomes to get it back. it also has the direct benefit of drastically reducing the bureaucracy since you don't need all those eligibility checks and associated paperworks (and associated costs)
throw0101d 23d ago
> Just tax those with high incomes to get it back. This appears to not raise as much money as many people think. Interesting conversation with UK tax lawyer Dan Neidle on the topic: * https://www.youtube.com/watch?v=hgQONOM15HI https://www.youtube.com/watch?v=hgQONOM15HI * https://en.wikipedia.org/wiki/Dan_Neidle https://en.wikipedia.org/wiki/Dan_Neidle (Of course there could be reasons besides strictly revenue to do it, but folks should be realistic about the pros and cons.)
- laurencerowe 23d ago
  You absolutely need broadly based taxation for social democracy. But specifically for clawing back benefits from higher earners you can absolutely tax those same higher earners instead. Dan has actually criticised a similar situation in the UK where child benefit is clawed back from higher earners. > If I was a Tory Chancellor, I wouldn’t abolish inheritance tax. I’d fix the ridiculous marginal rates that mean there are hundreds of thousands of 30-somethings paying more than 70% tax on every additional £ they earn. https://taxpolicy.org.uk/2023/09/24/70percent/ https://taxpolicy.org.uk/2023/09/24/70percent/ It’s reasonable to question the balance between how much taxation should be born by higher income pensioners (who likely own their home outright) vs working age people at the same level of income (who additionally pay social security tax). Maybe it would make more sense to roll social security into the tax system and raise pension payments so lower income pensioners don’t lose out.

andrekandre 24d ago

> Just tax those with high incomes to get it back. it also has the direct benefit of drastically reducing the bureaucracy since you don't need all those eligibility checks and associated paperworks (and associated costs)

throw0101d 23d ago

> Just tax those with high incomes to get it back. This appears to not raise as much money as many people think. Interesting conversation with UK tax lawyer Dan Neidle on the topic: * https://www.youtube.com/watch?v=hgQONOM15HI https://www.youtube.com/watch?v=hgQONOM15HI * https://en.wikipedia.org/wiki/Dan_Neidle https://en.wikipedia.org/wiki/Dan_Neidle (Of course there could be reasons besides strictly revenue to do it, but folks should be realistic about the pros and cons.)

laurencerowe 23d ago
You absolutely need broadly based taxation for social democracy. But specifically for clawing back benefits from higher earners you can absolutely tax those same higher earners instead. Dan has actually criticised a similar situation in the UK where child benefit is clawed back from higher earners. > If I was a Tory Chancellor, I wouldn’t abolish inheritance tax. I’d fix the ridiculous marginal rates that mean there are hundreds of thousands of 30-somethings paying more than 70% tax on every additional £ they earn. https://taxpolicy.org.uk/2023/09/24/70percent/ https://taxpolicy.org.uk/2023/09/24/70percent/ It’s reasonable to question the balance between how much taxation should be born by higher income pensioners (who likely own their home outright) vs working age people at the same level of income (who additionally pay social security tax). Maybe it would make more sense to roll social security into the tax system and raise pension payments so lower income pensioners don’t lose out.