re: #363 Cannadian Club Akbar

Just asking, don’t get me wrong. Got a number? (percentage)

actually, I was answering SATV4U2’s question of whether different types of income should be taxed differently.

I do feel that a progressive distribution is correct - that higher incomes should pay a greater proportion of the whole.

I’ve long proposed the semi-serious “simple tax”, where everybody pays 50% of their net income — income after expenses. More seriously, there’s a lot of study that shows that if you’re under roughly 150% of the federal poverty limit (FPL) you can’t save because everything goes to what I call “roof and table”. There are several additional elements that go into that, of course, but the concept is there: you need shelter, you need food, you need trips to the doctor, you need a means of contacting and being contacted by employers, you need something for mental stimulation, etc.

It’s not till you cross the ~200% FPL that you can not only do a little saving but actually invest (or spend on large frivolities: regular trips to disney world instead of once in a lifetime for example).

So what you’re doing by taking money from everyone under 200% FPL is cutting into their future, not their comfort. Sadly, these days 200% FPL is approximately the median household income (MHI) of the US; it used to be less. Anyway, this means that 50% of the US population would pay federal income taxes from their future or their roof and table.

A clarification. By future I mean their ability to have roof and table after they no longer have an income.

Over 200% of FPL, or above the MHI, taxes are cutting more into comfort; sustaining the lifestyle to which they’re accustomed. Yes, that level pays more for roof and table, more for their future. They are also paying significantly more into their comfort - and as a proportion of their income, the comfort grows a lot as the income increases.

Quite frankly, I think anyone earning over a million a year should be paying 90% of what they earn over that million into taxes, and that anything not covered by that amount should be divided on a proportional basis among everyone earning over 200% of the FPL — which would probably, based on our past, become less than the MHI.

As to my response to satty, I don’t think people should get tax breaks (capital gains) for investing. Investments pay better than savings, especially after inflation is taken into effect. Giving a tax break merely rewards what those who had the ability would do already.