Percentages don’t scale well into the billions, you will still need brackets.
A billionaire can give away 98% of their wealth and still comfortably be a multi millionare.
A full time cashier on the minimum wage can barely even survive on 100% of their wage. When it comes to living a healthy fulfilling life, If they contribute just 5% of their wage to tax they are sacrificing far more a billionaire paying 98% tax would be.
There is – the income bracket isn’t what all your money is taxed at. It’s a graduated scale. I’m going to make up numbers here just for an example.
I make $125,000. The first $5000 has no tax on it. The next $20000 are taxed at 5%. The next $25,000 are 10%. The next $30,000 is taxed at 15%. The next $30000 is taxed at 20%. And the last $15,000 are taxed at 35%.
So my total tax is 20000(0.05) + 25000(0.1) + 30000(0.15) + 30000(0.2) + 15000(0.35) = $19,250. My effective tax is 15.4%, even though I’m taxed higher than that on $45000 of my $125000.
It’s a piecewise function basically. And it works really well here because you start getting into very discretionary spending when it gets high, you’re not buying the essentials. You could have a bracket that has 75% tax on everything above a million for instance, and poorer people would be completely unaffected. This is why the myth of “if I get a raise I’ll be in a higher bracket and pay more in taxes” is incorrect.
Yeah so everyone is saying that the issue is that this system stops at the last bracket at 35%. If there was some continuous way to calculate the percentage, this pattern would be able to keep going.
When you say continuous, do you mean the tax rates? I assume so, because those are discrete numbers. You’re basically saying then what whatever the last bracket is, it needs to scale from 35% (in this example) to 100% at a certain income?
I don’t dislike the idea necessarily, but I think the problem with the wealthy not paying enough in taxes isn’t the highest rate, but what is taxed and how. Selling stock for instance is taxed at a lower rate than income, so we’d need to add a stipulation that if you make more than X, it’s taxed as if it’s normal income. (You’d have to make some exceptions for retiring people but that’s easy enough)
The Inflation Reduction Act had an idea that I think is worth pursuing, or at least calculating how it would go for the rich. Companies making a certain amount of profit in a tax year have to pay some % (maybe 20?) if that’ll be higher than their taxes calculated normally. It stops the loophole that lets corporations get away with paying no taxes. If we did that for rich people, I wonder how it would go. My gut instinct is that it would actually help a lot.
Edit: I just described Alternate Minimum Tax, which is a thing already. We’d just need to close loopholes around it by not letting anyone claim a deduction on it.
Probably not to 100% (because then the net income would go down) but yeah something like that. And yes you’re right, there are still many loopholes for rich people to avoid taxes so those issues should probably be fixed first. But to be fair I don’t know much about taxes or economics, it’s just an idea I had.
because then paupers would pay the same rate as billionaires. At the same time brackets make sure eveyone pays the same for the set amount. So even if more brackets were introduced billionaires would pay the same rate on their first 100k as millionaires. People of wealth only pay higher on the actualy high level. Whats crazy is we have several brackets that basically run through the 5 figure range and just into the 6 but none higher were 5 figures should just have one lowest rate.
It’s a percentage that nominally increases as wealth goes up.
Poor people need to spend a higher percentage of their income meeting basic needs, so having them pay the same percentage as the wealthy puts a higher burden on the poor.
In top of that, the wealthy are able to put a higher percentage of their income in things like investments, which are taxed at a lower rate (to encourage investing in the economy over hoarding wealth), so a flat rate tax would be effectively a regressive tax.
The problem is investments vs income. It’s not a super straightforward problem to solve. Having said that other countries have implemented a wealth tax, so it can be done
innumeracy. “Why would it help to have an intuitive understanding of large quantities? You think it would help grasp situations where they’re used or something?”
Think it alludes to things around if you have 5 million dollars you can live off it for the rest of your life. If you have 5 billion dollars you can buy a $500,000 house daily and never use a dollar of your initial 5 billion. (Assuming 5% interest). Creating a forever rich family that no one will ever have to work again. That interest all gets pulled from the lower & middle classes slowly draining them and in truth the 5B owner won’t be buying a new house daily, it will just rack up and maybe they will invest in a few other large companies. Until eventually you get a financial distribution that looks similar to what we have today. And it only gets worse unless you can tax in such a way that the wealth feeds back into those lower classes. A person with 20m dollars isn’t much of an issue. A person with 20b dollars can wreck an economic system over time.
The economic system is set up in such a way that rich eventually are taking food out of the poors mouths by breathing. Or not, in the U.S. we had an official state something along the lines of only a fool pays inheritance tax.
I had a dream this week that I won 2 billions somehow in a lottery. I had so many headaches thinking about all the friends etc… and how to give the millions away to all of them and family. And these guys are storing them like a dragon and it’s gold.
What blows my mind is is that astronomers work with numbers incomprehensible to the human mind every day. Of course, they can calculate them, but to comprehend what a trip to our nearest galaxy would be like? Pretty damn difficult. What it would be like to travel from one end of the known universe to the other? Our fragile minds just can’t take in numbers of that magnitude.
There’s a Tom Scott video where he illustrates the difference between a million USD and a billion USD, expressed as the size of a stack of 1 dollar bills.
A million was about the size of a football field and a less than two minute walk.
A billion took him from somewhere near London all the way to the east coast, and had him drive for over an hour.
What’s funny is millionaires arguing against tax increases on the right when they are much closer to the pleb than they are from the billionaires that are the ones who would really pay the price.
I think that this is a pretty bad and deceptive way of demonstrating the size comparison. Mainly because only 60 sec go into 1 minute, not 100. Only 60 min go into 1 hour not 100. Only 24 to a day etc.
Still though I agree thet people have a hard time grasoingbthe difference between millions and billions
Why do the ratios of conversion matter at all? The point is that all three of 1 second, 11 days, and 31.5 years are human comprehensible quantities. You can look at those values and actually understand the difference without having to do mental conversions.
Well, because you can see at the result of this meme, that the result is extremely misleading. It is correct but not representative of how much more one billion is compared to a million.
1bill is just 1000 times more than 1mil. The example here makes it look like a lot more.
Instead you could compare 1mil kilograms = 22 Titanic’s where 1bill kilograms = 22000 Titanics. But that is too straight forward and people would not react the same way as they do when you use time instead of a ratio that is representative of the numbers you are trying to compare
What? It is exactly representative. The values are correct and comprehensible. The fact that the numeric orders of magnitude of the units involved don’t progress uniformly is irrelevant. The point is that they are all values that are relatable within normal human experience.
1 kilogram, 22 Titanics, and 22000 Titanics doesn’t help at all. There is no number of Titanics that is is a human relatable quantity.
