In my opinion, do away with income and capital gains tax and have a pure consumption tax instead. Want a lavish lifestyle? Then you will pay higher taxes.
I hold a similar view. Why should someone pay more taxes just because they earn more.
Taxes should include a 'constant' term for benefit that everyone in the society is reaping (e.g., security, public infrastructure and facilities, etc.). There can also be terms proportional to the spendings/lifestyle (i.e., sales tax) and even income, when again the government is introducing some benefit per sale or money earned.
The prime purpose for governments, and thereby enforced taxes should be to pay for things needed that no one individually will otherwise pay for but which the society as a whole needs. An an example, pollution hurts everyone, yet, no particular entity would spend on curbing pollution unless done by enforcing at a social level.
Note: If there is no tax whatsoever in earnings, there would also be a need for some additional tax like inheritance tax, which I support, so that people do not just keep on hoarding the earnings without ever spending.
Of course, in a ZIRP fantasyland the interest is negligible.
That would be insane.
I guess it’s a bet you’ll be dead before the interest outweighs the potential tax, or volatility spikes? Betting on your own death seems to macabre, and too tempting too the fates.
Over the long run it tends to work in their favour as well, since it's very likely that the increase in the portfolio value will outpace the interest paid.
Ah, right. Caught me twice on my fixed-pie thinking :)
And yes, a bet that interest rates will remain below effective tax beyond that.
That turns out to be incredibly regressive as the poor spend almost all of their income, where as the rich spend a fraction of a percent.
So you end up with them paying even less, and the worker paying far more. It's called a "flat tax" and it's a horrible idea.