I recognize this is one of the main ways Policy is implemented (incentives can drive certain behavior), but we’ve got hundreds of years of complexity going on and I wouldn’t mind simplifying this.
I don’t know where to start though.
What needs to be taxed is wealth, not income.
I am against a system in which some escape work while others do not.
^- is another awfully slanted question.
Collectivism is overrated and unnecessary. I'm a misanthrope and I don't want to live in a collective society, I want to live in a society where I can get away from other humans and keep to myself. Taxes and laws are enough to keep society civil and functional; going beyond that is imposing your own personal beliefs on everyone else, like a theocracy or dictatorship.
It is hard to tell!
This is a pretty hilarious take IMO. Cooperation is literally the only reason humans are the dominant species on the planet. But sure, "overrated and unnecessary".
Life's not fair, and no amount of politics or regulations will change that. There will always be some people with better health, more attractiveness, more intelligence, more charisma, better connections, more drive, better self-control, and so on. I have excellent physical and mental health despite hardly ever going to a doctor in my life; I have good genes and I have a natural interest in eating healthy and exercising. Some people are born into rich families and will never have to work a day in their life if they don't want to. Some people are beautiful and go about their life just shy of being worshipped because of their looks. That's life.
I have zero problem with a world in which some people have a way better life than everyone else. My goal is to avoid bringing anybody down while bringing as many people as possible up. Let the rich guy be rich, and find a way to help the poor guy educate himself and get more opportunities. Let the beautiful people be beautiful, and help everyone else take care of themselves better and learn to make the most of what they have. It's anti-freedom and dictatorial to force everybody to wage slavery just because some people are born poor or are careless about their finances.
That's not what the OP said. They said that they're against a system that permits some to escape work while others never can. In other words, some people can comfortably retire when they're old, and some are basically forced to work until the day they die, and some never have to work at all. That's not at all the same as saying that everyone should have equal outcomes at all levels of the game, so much as saying that everyone should eventually be able to cross the same finish line.
> It's anti-freedom and dictatorial to force everybody to wage slavery just because some people are born poor or are careless about their finances.
What you're failing to recognize is that wealth disparities are artificially created by government policies. The government isn't going around dictating to people what is or is not beautiful, or dictating what you must eat so you will be healthy, or what you must wear to be fashionable, but they are dictating what every person must pay into the system to keep it running.
It turns out, the people who are benefitting the most from the system are not paying into that system. If you're really interested in spreading freedom, then perhaps you should be more invested in the 99.9% whose financial freedoms are being curtailed in order to prop up that remaining 0.01%.
That's exactly what I was referring to. Unless everybody can retire, nobody can retire. No thanks. I will do whatever it takes to keep the US from becoming that kind of a dystopia.
> What you're failing to recognize is that wealth disparities are artificially created by government policies.
I don't hold that belief. Disparities and inequality are fundamental to human life, which is why I gave the example of attractiveness, health, etc. I also mentioned careless people because you'll always have people who are self-destructive or unable to support themselves, and you can't help every single person. I'm not bothered by that, I accept it as reality. Thus I think it's utopian to believe it's possible to live fully equally, and it only keeps anybody from having nice things just because there's not enough for everyone.
No, it simplifies to "everybody can retire, period".
> I don't hold that belief. Disparities and inequality are fundamental to human life
When someone refers to "wealth inequality", they're not talking about disparities of 1 or two orders of magnitude, they're talking about 5 or 6 orders of magnitude. Show me a disparity in beauty or health of 6 orders of magnitude.
It's pretty clear that these analogies are not remotely faithful to what we're discussing here.
Sure, I'd love that too. It's a great goal but not one that I remotely believe is actually achievable. Feel free to come back within the next 50 years and say you told me so if I end up being wrong.
> When someone refers to "wealth inequality", they're not talking about disparities of 1 or two orders of magnitude, they're talking about 5 or 6 orders of magnitude.
This is an unfounded claim. I'd love to see what data you're basing this on.
> Show me a disparity in beauty or health of 6 orders of magnitude.
I can also easily show you disparities of that magnitude: just look at any of the many chronically ill patients that rack up medical expenses throughout their life, versus people who smoke and drink into their 80s and 90s without a problem and never see a doctor. You can easily use total lifetime medical cost as a metric if you want to meet your arbitrary disparity threshold. If you're in the "everyone's beautiful/healthy/smart in their own way" crowd then we have fundamentally different stances and there's little use talking further.
I feel we should somehow work to become more distributed instead of forcing people to come to large cities because all the opportunity is there
That is true for the height of humans. Most other things with humans, not so much.
A tax on people making $400k a year causes a giant spike in people making $399k a year.
I think no matter what you do, bad unintended consequences will occur.
I agree, and that's why I don't freak out when we have inequality. It's unavoidable for as long as we allow humans to grow based on genetic lottery rather than pre-approved personalities. No matter what system you have, if I'm smart and selfish enough, I'll find a way to exploit it for my benefit at least, and maybe go out of my way to harm others if I'm sadistic, too.
There is not a good answer that I have found to the taxation issue. Wealth is self-sustaining over the short term like advantageous mutations are self-sustaining in biological systems.
In Elizabeth Warren's proposal, they would be subject to a 40% exit tax on the wealth that they moved. If they didn't pay the exit tax, that would be fraud.
The alternative is to move your money overseas and renounce your American citizenship, at which point you would owe a 40% exit tax.
One could certainly hide their assets overseas, but that would be tax fraud, and if discovered would result in prison time for both accountant and wealthy individual.
I believe some basic amount of wealth should be tax free (e.g. x-amount of square meter living space per person in a household, a car with value up to 25.000 USD perhaps, etc...).
I also believe many ultra-wealthy people setup foundations to control their wealth after their deaths, avoid paying inheritance tax and keep wealth inside the family by being able to decide who is on the board of such foundations. Foundations are also used to peddle influence. I believe for these reasons that donations to foundations should not be tax exempt.
A flat tax removes the benefit of shifting income to different entities to pursue lower marginal taxes, but I don't think that's the kind of abuse we're looking at here, nor is that abuse particularly scalable.
Because there would be no way at all of scaling the tax based on income / wealth? So someone earning almost nothing with no wealth would be expected to pay the same tax as a billionaire?
This also seems bad: "The proposed Fair Tax Act would apply a tax, once, at the point of purchase on all new goods and services for personal consumption" - "personal consumption" is arbitrary. A VAT tax applied everywhere for all goods would be fair and harder to avoid. Though even that seems like it would encourage financialization to hide material production.
I write this as a member of the asset-owning class. I wasn’t always - I worked in the U.K., with my income automatically taxed via PAYE (Pay As You Earn), and paid between 20 and 45% effective tax rates on my earnings.
Now, my income is rentals and investments, and my effective tax rate is nearer 5%, on a much larger income than I ever had from employment. I’ve not done anything special or weird, I’ve just paid capital gains and written down the allowable expenses. It would not be hard to pay no tax, just by restructuring my finances a little, but it doesn’t sit well with me as it is.
Honestly, it’s nonsensical. At the very least asset income should be taxed at the same rates as labour income - but it should probably be taxed at a higher rate, as penalising productive labour and rewarding rent-seeking is ultimately contrary to the interests of everyone.
An addendum re the UK: it's funny how the UK tax scheme is so punitive on the middle class. Earn 100k pounds gross and take home 50k. But the moment you become an asset owner, you can basically optimize all of it away. The two income brackets "supported" by the UK tax regime are the poorest and the richest.
Actually, simplest thing to do mathematically is to skip the dollar-denominated accounting entirely, and just pay the government in kind i.e. asset forfeiture / putting the means of production in partial state control.
e.g. the gov owns stock in a company based on the distribution of private ownership (is it equal like ESOP or unequal like Facebook and Google?), and without regard to the market price of the stock.
I challenge the mathematically literate in America to really think through this.
I would start with "cui bono" and look into learning about the various institutions in place who's main purpose is to maintain the complexity, that would stand to make significant losses (or disappear) if it were simplified.
(just in case this sounds like pessimism or apathy, I don't necessarily think it is. But if one genuinely wants change, one does need to be aware of where hurdles lie)
Wrote more in the comments below:
I know that's not what you mean. But if you simply filed a 1040EZ, then paid a 20% penalty when the IRS sends you a letter saying pay the rest of what you owe, expect to pay... 28 percentage points effective instead of 26.
This is to say that tax complexity is a red herring. You can already live in an almost zero-complexity tax obligation personally, as a wage earner, above and beyond what is officially prescribed. It's not really what it's about. It's probably not about saving money either.