Sums it Up Perfectly

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[–]Canbot 6 insightful - 1 fun6 insightful - 0 fun7 insightful - 1 fun -  (15 children)

I think that is the wrong question. The taxes should be at a level that balances the budget. So right now that is higher.

Taxes should be easier to navigate. There should be an easy way to look up all the tax breaks and loopholes available. Not just so that everyone who qualifies can get those benefits, instead of just those who can afford a good tax attorney, but also for the sake of transparency so we can challenge bad loopholes.

But the right question to ask is "which, if any, government programs should be cut?" Taxes should be lowered by cutting the programs that they fund, wherever there is waste.

It would be a wast of my time to compile a detailed list, but there are lots of stories of government contractors getting away with murder. All kinds of games like bidding low then going over budget, no bid contracts, and cost plus contracts where they fraudulently jack up the costs. These should be addressed first.

[–]C3P0 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (14 children)

The taxes should be at a level that balances the budget. So right now that is higher.

30-50% of income taxed isn't even nearly enough for high earners. I think the income tax should go from 0-99%. While we're at it, get rid of these silly tax brackets where your 10th dollar is taxed at 5% then suddenly your 11th dollar is taxed at 10%. It makes no sense.

[–]Canbot 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (13 children)

tax should go from 0-99% ... get rid of these silly tax brackets

pick one. You can't have a progressive tax without tax brackets. It would be stupid to have you pay $500 if you earn $10,000 then make you pay $1,000 if you earn $10,001.

[–]alkhd 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (9 children)

I think "It makes no sense" = "I don't understand why" in this case lol. Doubly so because it still wouldnt eliminate brackets.

[–]C3P0 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (8 children)

your 10th dollar is taxed at 5% then suddenly your 11th dollar is taxed at 10%

How is that situation fair at all? A progressive tax is supposed to punish high earners with stiffer taxes, but imagine this situation:

  1. Joe makes $28,000 per year.
  2. Sally makes $30,000 per year.
  3. Joe and Sally's income remain within the same tax bracket.
  4. Joe and Sally both receive a raise of $2000.

Now despite Sally having a higher income, Joe and Sally's raises are both taxed at the same rate. For believers of a progressive tax, THAT is not fair.

[–]alkhd 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (7 children)

Joe still has a lower tax rate than Sally in this case, only thanks to progressive tax. Removing progressive tax wouldn't change the fact that their raise would be the same after tax though, it would just make it so Joe is taxed at the same rate as Sally instead of a lower tax rate.

Let me give you an extreme example of why removing progressive tax doesn't make sense: Let's say people who earn less than 1 million usd per year gets taxes at 0% while people who earn 1 million or more gets taxed 99%. Compare someone who earns 200k per year to someone who earns 10 million. The guy earning 10 million will only get 100k after taxes, how is that fair?

Without progressive tax you would have taxes would be a discontinuous function of income in contrast to continuous, making it a lot more unfair.

To not use tax brackets and still have a fair cotninous tax rate you would need to use a lot more complex functions to determine tax and it would be a lot harder to debate about tax changes (I challenge you to first make a reasonable function for taxing the poorest people 0% and the richest 99%, and then change the function to tax the poorer half a little bit less while raising the richer half's tax rate. Then imagine trying to debate what tax function to use). Most countries use progressive tax brackets so you have one bracket for people in poverty, lower class, middle class, higher class. This way you can raise or lower taxes for any class very easily while still making sure someone who earns 70k doesn't earn less after taxes than someone who earns 69k because the tax bracket changes at 70k

[–]C3P0 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (6 children)

Let me give you an extreme example of why removing progressive tax...

I am in favor of a progressive tax and never said otherwise. I already answered your challenge in my previous reply to /u/Canbot. It does exactly what you described and can be modified easily. It is the well-known logistic function:

T = 1/(1+e-x/50000+2)

It took me 2 minutes to come up with a solution better than any income tax solution ever passed by Congress. This is the reason why the pseudo-democracy fails: the majority would never vote for a logistic tax function.

[–]alkhd 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (5 children)

Someone earning 500 dollars taxes 12% and someone earning 2 million taxes 100%.

Someone earning 500 usd will literally have a higher wage after taxes than the guy earning 2 million, not to mention its very inflexible (you gave a honestly terrible answer to the first part of the question and skipped the second part).

here's a graph of your function showing how utterly terrible it is, x is pre-tax income, y is post-tax income, it's also not a progressive tax rate

[–]C3P0 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (4 children)

Change the numerator to 0.9 if you'd like. Also, the function can never return 100% for any real number.

Mathematical functions can be shifted, stretched and compressed as needed. I thought it was a pretty good answer. Have a nice day!

[–]alkhd 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (3 children)

Change the numerator to 0.9 if you'd like. Also, the function can never return 100% for any real number.

It's still beyond retarded.

Also, the function can never return 100% for any real number.

Yeah sure if you don't consider a 99.999998477% tax for someone earning 1 million to be 100%, well I guess they still technically earn a cent so it's not so bad.

I thought it was a pretty good answer.

Seriously? You would have people all over the world laughing at how ridiculous you are if you were in a position to suggest this tax rate. You said that this is better than any income tax solution ever passed by Congress...???

[–]C3P0 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (2 children)

You can't have a progressive tax without tax brackets.

That's not true. For example, assume x in your income and T is the percent of your income that is taxed.

T = 1/(1+e-x/50000+2)

No discrete brackets for income, so no funny business like your first $1000 dollars gets taxed $100 while the next thousand gets taxed $200. Tax brackets are remnants of a time where computers didn't exist and lawmakers are too incompetent to write laws with mathematical functions.

[–]Q-Continuum-kin 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

Most people can't even understand normal tax brackets, putting them on a smooth curve would break their brains. I have actually had some blue collar guys tell me they argued for a specific raise to stay inside a tax bracket and argued with me that they would make less if they went over X salary. Basically they took a lower salary than they were worth because they thought they were gaming the system.

[–]C3P0 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (0 children)

That's right. A lot of people don't understand it despite having a college degree.