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A new way to tax

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posted on May, 1 2015 @ 04:08 PM
I have been thinking of this system for awhile. To begin let me lay out what the problems in our current tax system are:
1. Complicated tax code that makes taxes paid vary more by the loopholes your account knows than any financial status.
2. Regressive system. Taxes are progressive up to about \$85,000 in income and then become regressive so that those who make more pay a smaller percentage. This puts most of the tax burden on the lower middle class and average middle class.
3. Marginal rates. We waste more time and energy arguing over what the optimal marginal rates should be for everyone (especially the top rate) than on matters of consequence. In the end if a group pays 24% or 25% it matters little but these small details prevent any real progress from being made and in the end the rates are totally arbitrary.

I believe I have come up with a system that solves all of the above without relying on a flat tax.

Individual tax rates will be determined through each individuals percentage of wealth they own in the country. I'll use a simplified example here of single percentiles but any real system would probably want to break down to 1/10th of a percentile.

In the US currently this is roughly how the ownership of wealth breaks down by percentile of net worth
99 - 35%
98 - 10%
97 - 8%
96 - 7%
95 - 5%
94 - 4%
93 - 3%
92 - 3%
91 - 2%
90 - 1.2%
89 - 1.1%
88 - 1.1%
87 - 1%
86 - 1%
85 - 0.9%
84 - 0.9%
83 - 0.8%
82 - 0.8%
81 - 0.7%
80 - 0.7%
79 - 60 - 8%
59 - 40 - 4%
40 - 20 - 0.75%
20 - 0 - 0.05%

Being based on percentiles there is a specific fixed number of people in each category. Going by the most recent census there are 244,563,362 people in the US over the age of 18. This means that there are 2445634 people in each income percentile. This means that with the simple formula of percent of net worth owned/number of people in percentile you can get the percentage of the nations wealth that any individual owns. So for a person in the 99th percentile they would own 0.00000014311217459 of the nations wealth while a person at the 50th percentile is closer to owning about 0.25% so they would have 0.0000000010222298185.

So what you may be asking now is how does this number mean anything? Well, it means something because that percentage is the percentage of the federal budget that person needs to pay. Our most recent federal budget was roughly 3.504 trillion, that's \$3,504,000,000,000. Multiplying that by the 99% share that person would owe \$501465.06 in taxes for the year while the 50% person would owe \$3,581.89.

So at first glance this probably looks like it shifts all the tax burden to the top few percent. That is only true initially. What would happen is when a few people at the top own most of the wealth, they pay the majority of the taxes, this removes their wealth while others build wealth. When this happens the tax burden is more equitable. If we get to the point where everyone is paying mostly the same and inequality becomes too sparse, successful people can make a lot of money without paying much in taxes and restore some income inequality.

Eventually things would equalize become less volatile. Those at the bottom would have a larger share which means they would be paying meaningful amounts of taxes, while those at the top would eventually find themselves well off but not in a position where they own (and are thus paying for) everything.

The one major drawback I have thought of with this system is it requires up to date wealth demographics year after year. This would probably require adjusting the census from a once per decade project to a once per year project or at most once per two years.

This system addresses every point I listed in my intro as a problem however.

1. The tax code is very simple, a novice with excel could calculate easy to publish tax tables in a couple minutes. All it requires is some multiplication which anyone with a calculator can do. And with this simplification it also sidesteps many of the pitfalls of a flat tax.

2. It isn't regressive, and it isn't progressive either. People pay according to what they have, the burden is applied to all equally without disproportionally affecting any group.

3. It removes any bickering over marginal rates. Brackets are determined by income percentile rather than graphs and laffer curves.

posted on May, 1 2015 @ 04:37 PM

Yep.

See, we will not see real tax reform ever.

The power of congress sits with "manipulating" the tax code for personal profit. Having the power to "exempt" and "subsidize" their donors is the #1 Power they have.

That is pretty much it.

Flat Income tax (no exemptions) not going to happen.

Consumption Tax (no exemptions) not going to happen.

Any easy tax that cannot be manipulated with exemptions, loopholes, and subsidies for chosen voter group or political donors, not going to happen.

Any questions?

edit on 1-5-2015 by infolurker because: (no reason given)

posted on May, 1 2015 @ 04:45 PM

Wait a minute.

Taxing on "Net Worth" and not consumption or income?

That would not work.

Say I work hard for 30 years and bought an house and now my house and land is worth \$700,000 by today's standards and I freeking retire.

You are going to tax someone with no real income except social security out of existence? Taxing someone on something they have already paid and have been taxed for is theft (property taxes are a good example, you never get to own anything).
edit on 1-5-2015 by infolurker because: (no reason given)

posted on May, 1 2015 @ 10:09 PM

originally posted by: infolurker

Wait a minute.

Taxing on "Net Worth" and not consumption or income?

You could do it by net worth, financial worth, or gross income. They all have positives and negatives. If you tax by income those with high incomes can take compensation that isn't included in income such as stock options and other forms of capital gains. Taxing by financial worth has the same issue, as a person could only own \$100k on paper but have access to real estate worth billions. Net worth is what's ultimately more fair, because a person like Warren Buffet is worth what he's worth, no amount of shifting money will change that (unless he gives it away, in which case he's worth less).

That would not work.

Say I work hard for 30 years and bought an house and now my house and land is worth \$700,000 by today's standards and I freeking retire.

You are going to tax someone with no real income except social security out of existence? Taxing someone on something they have already paid and have been taxed for is theft (property taxes are a good example, you never get to own anything).

If your net worth is in a high enough bracket that you have to start selling property in order to meet your tax obligations, then you fall in your percentile and next year you pay less. You're never taxing a person on their income or their property here. You are making them pay a portion of the federal budget (could do it for state too) equal to their share of the wealth in the country. Why should a person who owns a lot of commodities but has no income (high share of wealth, low rate of wealth generation) not be paying equal to the amount of wealth they have? Wealth represents not just ability to pay, but can be seen as a reflection of the benefit a person has gained from society. Those who aren't benefiting from societies ability to make a person wealthy are at the bottom and not giving back, while those who have benefited are.

posted on May, 1 2015 @ 10:20 PM

Well said cant really break it down any simpler.

To bad the majority dont see how purposely govt processes are designed with complexity to hide the real intentions.

As they say ignorance is bliss.
edit on 55531America/ChicagoFri, 01 May 2015 22:55:57 -0500up3142 by interupt42 because: (no reason given)

posted on May, 2 2015 @ 12:47 AM

If your net worth is in a high enough bracket that you have to start selling property in order to meet your tax obligations, then you fall in your percentile and next year you pay less. You're never taxing a person on their income or their property here. You are making them pay a portion of the federal budget (could do it for state too) equal to their share of the wealth in the country.

Yeah, no thanks.

Keep your socialism. I will keep the property I have worked for.

Socialism = everyone suffers equally except the elite. No thanks.
edit on 2-5-2015 by infolurker because: (no reason given)

posted on May, 2 2015 @ 04:27 AM

I agree with your idea, the concept has a lot of merit and should receive professional attention.

thanks for bringing this up, good post.

posted on May, 3 2015 @ 03:43 AM

originally posted by: infolurker

If your net worth is in a high enough bracket that you have to start selling property in order to meet your tax obligations, then you fall in your percentile and next year you pay less. You're never taxing a person on their income or their property here. You are making them pay a portion of the federal budget (could do it for state too) equal to their share of the wealth in the country.

Yeah, no thanks.

Keep your socialism. I will keep the property I have worked for.

Socialism = everyone suffers equally except the elite. No thanks.

It's socialism to design a concept that says when the rich are being taxed too low, they are in a prime position to make a lot of money? A system like this allows people to have good ideas and excel. When there is low income inequality people can take advantage of it, while times of high income inequality are reigned in. Essentially, it ebbs and flows over time allowing it to take on the boom cycles (though without the bust) of most capitalist systems.

Equal suffering in this case would only exist when everyone from the 0th to 99th percentile own the same share of wealth. However, considering markets and peoples talents, such a thing if it were to happen would quickly change. There being a rich and poor is a natural consequence of economic participation, this is even good to an extent. I don't know precisely where the cutoff is that it ceases to be good, but I do know we're past that point now with 1% owning 47% of the wealth. Of course, with this system I and anyone else doesn't need to know that cut off. Market forces take care of it for us.
edit on 3-5-2015 by Aazadan because: (no reason given)

posted on May, 3 2015 @ 03:58 AM

The greater reality with this thread is that none of us need to pay tax. If you research banking and loans etc, the money is created at the point of signature by the applicant, you and I.

If you and I create money through our signature then it stands to reason that the government can create all the money it needs to provide all the goods and services required in the economy, just through signing a document.

posted on May, 3 2015 @ 05:01 AM
In general I agree with taxation on wealth however as has been pointed out the problem is that high wealth and high income do not always go hand in hand.
There are however ways round this problem such as allowing deferred payments. This of course removes some of the simplicity of the system.

posted on May, 3 2015 @ 05:11 AM

You brought up good points but just once I would like to see ideas about NO TAX except for goods and services

posted on May, 3 2015 @ 05:22 AM
Sales taxes, duties etc are all inherently regressive. To set them at a level that would allow the removal of income taxes would cause mass poverty given the current economic set up.

posted on May, 3 2015 @ 05:47 AM

Or

Maybe

Maybe government don't need half a trillion in funds to build underground luxury cities for the elite

Or the space weapons, or half a world Chemtrail program.

Plenty of money if you are wise, never enough if you are foolish. There is some eastern wisdom for you. Just ask China.

posted on May, 4 2015 @ 03:14 PM

originally posted by: Volvo1st

Or

Maybe

Maybe government don't need half a trillion in funds to build underground luxury cities for the elite

Or the space weapons, or half a world Chemtrail program.

Plenty of money if you are wise, never enough if you are foolish. There is some eastern wisdom for you. Just ask China.

Or, maybe they do. My system would eliminate deficits because there wouldn't be any borrowing. The budget would cost what it would cost, if you tacked an extra 10% onto the budget you could even start paying down the debt.

The government needs to spend a lot, if anything we aren't spending enough right now. Sure some areas could use less funding, but other areas need way more.

posted on May, 4 2015 @ 03:33 PM

originally posted by: Volvo1st

You brought up good points but just once I would like to see ideas about NO TAX except for goods and services

that wouldn't be fair.....example:...if I made 5 million a year, but only spent 500 thousand a year on goods and services, then I would be taxes on 10% of my income...if I made 30 thousand a year, and spent 27 thousand on good and services, I would be taxed on 90% of my income....how long would it take for the people that made 5 million a year to own everything in this world, while still enjoying a great lifestyle on 500 thousand a year?

posted on May, 4 2015 @ 04:01 PM

originally posted by: Volvo1st

Or

Maybe

Maybe government don't need half a trillion in funds to build underground luxury cities for the elite

Or the space weapons, or half a world Chemtrail program.

Plenty of money if you are wise, never enough if you are foolish. There is some eastern wisdom for you. Just ask China.

Or, maybe they do. My system would eliminate deficits because there wouldn't be any borrowing. The budget would cost what it would cost, if you tacked an extra 10% onto the budget you could even start paying down the debt.

The government needs to spend a lot, if anything we aren't spending enough right now. Sure some areas could use less funding, but other areas need way more.

I think you need to do some research in finance, and the history of money whether it's gold/silver (hard assets) or fiat(soft assets).....a lot of misery, destruction, and death can be attributed to the social upheaval brought on by lack of a rational monetary borrowing system.

posted on May, 4 2015 @ 05:30 PM

A wealth tax is a very, very bad idea and I'll tell you why. My parents would be classified as "wealthy" even though they live on fixed income. Why? They live on the family land with the family house that has been in the family for five generations if you count mine. Because of the value of land, they have lots of "wealth," but aside from the annual rents some cousins pay for farming it, it brings in little to help supplement their income - maybe \$3,000/year. This is on top of meager retirement savings as my mom was a life-long secretary and my dad was a life-long clerk/fertilizer wroker at the local co-op and whatever SS they will pull in.

THose meager monies will not pay for their "wealth" taxes at even a flat tax rate.

And why should you continue to be taxed on things you already bought and paid for? It's like continuing to pay rent on things you already own. Property tax is bad enough.

posted on May, 4 2015 @ 06:03 PM

originally posted by: jimmyx
that wouldn't be fair.....example:...if I made 5 million a year, but only spent 500 thousand a year on goods and services, then I would be taxes on 10% of my income...if I made 30 thousand a year, and spent 27 thousand on good and services, I would be taxed on 90% of my income....how long would it take for the people that made 5 million a year to own everything in this world, while still enjoying a great lifestyle on 500 thousand a year?

We already have this. Capital gains are taxed at 15% while wages are taxed at an average of 23%. The person making \$5 million pays 23% on say \$300,000 and 15% on the remaining 4.7 million for an effective 15.48% while the person making \$50,000 pays an effective 23%.

originally posted by: jimmyx
I think you need to do some research in finance, and the history of money whether it's gold/silver (hard assets) or fiat(soft assets).....a lot of misery, destruction, and death can be attributed to the social upheaval brought on by lack of a rational monetary borrowing system.

I'm very well researched on it. It's precisely why I say our current government budgets are too low. That also has to do with tax rates being too low. In study after study as well as real world examples, tax rates have little if any negative impact on quality of life. In fact the highest quality of life countries also have the highest tax rates. One of the big problems the US currently faces is that we're more or less funding the effective military for the entire western world, but we're the only ones paying for it. This causes us to not have enough money for other things like education and science.

originally posted by: ketsuko
A wealth tax is a very, very bad idea and I'll tell you why. My parents would be classified as "wealthy" even though they live on fixed income. Why? They live on the family land with the family house that has been in the family for five generations if you count mine. Because of the value of land, they have lots of "wealth," but aside from the annual rents some cousins pay for farming it, it brings in little to help supplement their income - maybe \$3,000/year. This is on top of meager retirement savings as my mom was a life-long secretary and my dad was a life-long clerk/fertilizer wroker at the local co-op and whatever SS they will pull in.

And what metric would you instead use? I pointed out that financial holdings (which isn't the same as net worth) could also be used fairly easily, but all that does is encourage people to buy land rather than have bank accounts. Earned income isn't a fair metric either because so much wealth is tied up in unearned income through returns on investments.

As a possible aside to this point, let me ask you something if you don't mind answering. What's a ballpark figure on the value of that land? 2 million? 5 million? 15 million? Under such a system, you may be surprised at where the people would fall on the percentile demographics (especially as there's two people, so any value would be divided by two for each persons holdings). Also note that because they have children and there is no estate tax under this system the land could be divided up among the children who can pay for it now.
edit on 4-5-2015 by Aazadan because: (no reason given)

posted on May, 4 2015 @ 06:04 PM
The people that take advantage of the tax code are the ones that write the tax code. The same goes with laws. Those who know how to exploit the law, make the law.

posted on May, 4 2015 @ 07:12 PM

Oh, so my sister and I can pay for it?

My sister and brother-in-law aren't much wealthier than my parents, and that puts the burden on my husband and I.

Again, why do you hate people who have assets? The long and short of it is that people work to earn stuff, and the government is keen to take it away because people like you seem to think we have no right to it. After five generations, shouldn't we have a right to the land my family has earned and paid for several times over as we have taken loans against it at times?

What it comes down to is a lack of respect for private property.

If you built a house with your own two hands, wouldn't you feel that you had a right to that house? I'll bet you would. Why then does the government feel it needs to come in and keep making you pay for it simply because you built it? You can grouse that people put their money into land to "shelter" it, but why not? If I work my @ss off at something then I deserve to enjoy the fruits of my labor as much as I can.

If the government stoped trying to yank everything we make out from under us at incresingly higher rates as though we work only for them using the excuse that they are really "punishing" the rich, maybe people would stop trying to so hard to dodge taxes, and if you stopped hating people who had more than you simply because they did, you might stop trying to take away what they had in the vain hope that some crumbs might fall off the government table and get to you. You only end up endorsing policies that rob a whole new class of people like small farmers what few are left instead of getting back at "The Man" like you want to.

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