Don’t Tax the Rich. Tax Inequality Itself.

This is an interesting idea but it would have several problems in practice. In particular, it lumps the 'low end' earners of the top 1%--those earning $330,000 per year--in with those earning millions. This would create a significant drag on those people's income above that amount. Let's say there was a 75% marginal rate in a given year. They would need to earn $4 to keep $1.

This strikes me as a similar idea to Warren Buffet's proposed tax on the rich (though his suggested bracket started at $1MM/yr). These taxes would effectively prevent people just entering this range from ever amassing as much wealth as the current crop of the super rich. I wonder why he didn't propose this tax a couple of decades ago?

A simpler idea would be to have a straightforward progressive tax, such that the lowest quintile payed something, anything (maybe 1%) and it went up from there in uniform increments. As it stands, nearly 50% of taxpayers pay zero, and the top 1% pay 40% of the total income tax of the US.

The tax system is completely broken. And it doesn't appear that it will be fixed in the foreseeable future.

I love creative policy ideas like this. It's an fascinating attempt to engineer a carrot and stick motivate the rich to help make all Americans better off. I'm not necessarily saying that I like to see highly engineered policies put into practice (and there's an argument to be made that people shouldn't be forced to have their livelihoods engineered), but it's fun to think about them.

The question I have is: Under this tax policy, what could/would the 1% actually do to ensure that the income of the 99% would grow at the same rate? Would the economically rational thing be to ignore the law? (perhaps hoping others would take action) Would they insist that more tax dollars go to education? (or is that too forward thinking?) Would lots of workers find themselves with immediate raises? Would the market hone in on previously unknown ways to make workers valuable? Would the 1% only attempt to help the top 10% or 25%, or would it be more fruitful to help the bottom X%?