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The main problem with your system is that you can't produce any pre-tax vs post-tax curve that you like (as you can with progressive income tax). It has to be
by yetanotherphd 13y ago
The main problem with your system is that you can't produce any pre-tax vs post-tax curve that you like (as you can with progressive income tax). It has to be a straight line. Now I'm not sure if this is really such a bad thing, but it is important to think about what the implications are.
- AnthonyMouse 13y agoThe effective tax rate is actually a curve rather than a straight line. The basic income causes the effective tax rate to start off negative and then become positive and approach the flat rate as income increases toward infinity. And you can make the curve be as flat or steep as you like by adjusting the flat marginal rate and the size of the basic income. I suppose it's true that you can't change the slope of the effective rate curve beginning at a particular income level as you can with a progressive income tax, but it seems to me the reason for wanting that in the income tax case is in an attempt to emulate the curve you're already getting with flat tax + basic income without having to complicate things by having a progressive income tax with a continuous marginal rate curve.