Comment by varispeed | Hacker News Reader

Comment by varispeed | Hacker News Reader

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> Progressive taxation has the exact opposite function to what you're suggesting. It's a mechanism designed to reduce economic inequality and the poverty among the low income workers.

I am not advocating that low income workers pay higher taxes - in fact they should be exempt. I am saying that if you are from such family, progressive tax ensures you'll stay in your lane.

> That figure is misleading, because it includes a set of expenses like social security, health insurance, government pension plans etc. Corporations don't pay that and that's why the difference may seems so big

My number is based on what you get in your pocket from your salary (plus employer's national insurance that is most of the time hidden from the payslip) I didn't include local taxes (like council tax) and so on. Corporations are supposed to pay Corporation Tax, but they can too easily transfer profits offshore and largely avoid that in contrast to SME who mostly pay this tax.

Progressive tax ensures that person from poor background will stay poor.

> Progressive tax ensures that person from poor background will stay poor.

How so? With progressive tax there is no point at which you make less money than if you had less income.

This statement becomes less true if you take into effect entitlement and assistance programs in the US atleast.

If you cross a threshold from 20% to 40%, for every £1000 made over that threshold you pay £400 instead of £200. Sure you are still making more money, but suddenly you don't have that £200 that you could save or invest.

A linear tax would mean a person trying to move up the income ladder is more encumbered by tax for the same amount of tax revenue on a given population.

Your suggestion above that low income workers are exempt from taxes, is a description of a progressive tax.

I’m not really sure I understand what you’re suggesting should be done.

Are you saying that 40% of tax is less than 20% of tax? I don't follow. My point is that the tax should be linear with tax free allowance. That is everyone pays 20% on income above tax free allowance. You can call it a progression, but this way anyone can level up if they want to. If you add 40% and more further down the line you are slowing down how people from poor background can improve their living.

For a government to make the same revenue with a linear tax as they do with a progressive tax, this mathematically implies that a tax increase for poorer people and a tax cut for lower people.

Alternatively, you can cut government spending, which normally means cutting services that disproportionately affects the poor.

Either way, moving from a progressive tax to a flat tax is a guaranteed net negative for the poor.

My original point is that corporation do not pay as much tax as they should. The come down from progression should be gradual - as corporate tax holes are plugged, the higher tax rates could be reduced. So that wouldn't affect the poor. It only slightly changes who pays for it.

I think what you're missing here is the alternative to progressive tax is all income is taxed at or close to the existing highest rates, as that is where by a very large margin most tax is collected. Ultimately this leads to those poorest in society suffering the most.

Because this 40% of tax only applies to what you earn above a certain threshold, at which point you are no longer considered to be a poor person.

That's true for all taxes, If tax is at 0%, you'll have all the money. Idea is for a person making 20k, tax is going out of food/shelter money, for someone making 100k, it is going out of vacation/investing, for one making millions, it is going out of extra money.

If you are paying 40%-50% you will never move up classes. It is a tool to prevent the middle class from reaching rich person status.

For the poorest many are paying no or little income taxes so the income is the issue not the taxes.

That makes no sense. How can you do away with progressive taxation without increasing the tax burden on the lower and middle classes?

It seems like you don't know what progressive taxation is since it's what you're actually arguing for...

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