How about a new tax bracket, starting around a million, or higher

[rob in cal]

With all the talk about the expiring tax cuts, one argument GOP has been using about why the tax cuts for the highest bracket, now at 35% must stay at 35% and not go back to 39% is that so many small business owners will get hit.  I wonder if Dems should come up with a counter proposal, calling for retention of that 35% for everyone in that rate up till around 1 million income or even higher, maybe 5 or even 10 million, with the rate then going up to the old 39% rate, or maybe even into the low 40's for everything over 10 million.  Anyway, personally I wouldn't lose any sleep if Bill Gates or Lebron James had to pay a modestly higher rate on their last millions of income than a senior professor and his doctor wife in Connecticut. To have the highest rate start at 250k seems quite a bit low to me, and I wonder if both sides can find some compromise about this.

[Sbane]

I would strongly support that. I think creating a bracket over $1 Million and another over $5-10 Million is necessary, and takes into account the increasingly inequal ways money flows in America these days. Unfortunately Republicans will never consider something like this. There is a reason why I call them the party of the rich (and not of the middle class, which would include the upper middle class).

[tpfkaw]

I generally stop reading after "how about a new tax..."

[Bull Moose Base]

It has leaked that the Democrats are in fact eyeing a compromise with the expiration of the cuts above 450,000 or something like that.  Of course the GOP has already made clear they won't compromise.  And they've already voted NO on bills that are basically just tax cuts out of fear it would create jobs when they were out of power.

[angus]

How about a new tax bracket, starting around a million, or higher

I've been thinking more and more about a flat tax.  

What does it cost for a person to live?  30K?  40?  50?  Whatever it is, that's the deduction.  And it would be scaled for your immediate family size.  Say, 100K for a family of 3.  Whatever.

Now, how much does it cost to run the government?  Let's say ten trillion dollars a year, just to pull a number out of my hat.  Okay, so we divide that trillion dollars per year evenly by all 200 million or so income-earners like this:  You claim your deduction, and anything you earn above that deduction gets taxed at a rate equal to an amount such that the federal government never goes into debt, based on some reasonable projection.  It'd take quite a bit of the fuss out of the paperwork (and maybe put a few CPA and lawyer types out of work), but it seems fair.  What would that rate be?  Something like 50% I suspect.  You could do the math more rigorously, but for most americans it would mean a significant tax break.  

For example, say you and your wife make about 120K together.  You have a child, so after deductions and such, you end up with an agi of about 80K for a family of three.  So you pay 20K in federal income taxes.  

Now, under my proposal, you only pay about 10K in federal income taxes.  Fatcats would pay more, of course, but they're paying the same percentage as everyone else.  

Any takers?

[angus]

Bear in mind that I'm making two assumptions based on current realities:

(1) we want to avoid debt

(2) we still want to keep our government spending at current levels.

I'd be all for nixing assumption #2.  I'll take it down to five trillion, or 200 billion, or whatever.  And of course that'll mean you pay less tax.  Maybe you only have to pay 20% or so above the deduction or something like that, depending on how much government we want.  So I am not saying that we should have a ten trillion-dollar-a-year federal burden.  Not saying that at all.  I'm Just going with the current spending level.  Lower spending levels of course would mean lower tax rates.  

In any case, once we have a good projection of the spending, then lets split that spending up fairly.  Tax us all the same percentage after we subtract enough to live reasonably comfortable.  And no, I don't consider the Dick Armey plan a good FTP because his deduction is 26K for a couple filing jointly, and an extra 5K for each dependent.  Don't use "poverty line" statistics for the deduction, unless an impoverished society is your goal.  Ask yourself what kind of place you want to live in, and base the deduction on that.  I think median gross income for a family of X members is a good start.  Steve Forbes puts his flat tax deduction at about 42K for a family of four, which is more generous than Armey's proposal, but the median income for a family of four is about 70K.  Something like that.  I'd go a little higher, maybe 100K for a family of four, but you have to bear in mind that for a given desired level of government spending, the higher the deduction, the greater the percentage burden must be in order to avoid debt.  So, even assuming that you could sell the flat tax idea to the public, and assuming that you could agree on an overall level of public services, we would still need to iron out the thorny issue of a reasonable deduction.  

Of course, if we don't buy into original assumption #1, then all bets are off.  Might as well stop taxing altogether.

[Grumpier Than Uncle Joe]

For example, say you and your wife make about 120K together.  You have a child, so after deductions and such, you end up with an agi of about 80K for a family of three.  So you pay 20K in federal income taxes.  

Now, under my proposal, you only pay about 10K in federal income taxes.  Fatcats would pay more, of course, but they're paying the same percentage as everyone else.  

Any takers?

[angus]

okay, we got us a ten-man march on washington!  Well, sort of.  (I'm counting the six randnecks and one witch in your signature, as well as you, the baby, and me.)

[Mercenary]

How about the first 50k in wage income is tax exempt.
Then get rid of all tax deductions, credits, etc.

0-50k = 0%
50k-1M = 10%
1M-10M = 20%
20M+ = 30%

[Grumpier Than Uncle Joe]

okay, we got us a ten-man march on washington!  Well, sort of.  (I'm counting the six randnecks and one witch in your signature, as well as you, the baby, and me.)

And since the rubes will be drinking moonshine, and the hottie and the baby don't drink, that saves the good sh**t for me and you!  Cheers!

[angus]

How about the first 50k in wage income is tax exempt.
Then get rid of all tax deductions, credits, etc.

0-50k = 0%
50k-1M = 10%
1M-10M = 20%
20M+ = 30%

Won't cover current spending levels, much less what the congress has signed us up for.  This means that we either go further into debt or adopt some austerity measures.

My rough calculation, based on current spending levels and your brackets would require this:

0-50k = 0%
50k-1M = 14%
1M-10M = 28%
20M+ = 45%

I'm assuming your revenue falls short by about 3 trillion dollars and I scaled everything up by a factor of 1.4 on all brackets.  Correct me if my estimation is in error.

[jimrtex]

With all the talk about the expiring tax cuts, one argument GOP has been using about why the tax cuts for the highest bracket, now at 35% must stay at 35% and not go back to 39% is that so many small business owners will get hit.  I wonder if Dems should come up with a counter proposal, calling for retention of that 35% for everyone in that rate up till around 1 million income or even higher, maybe 5 or even 10 million, with the rate then going up to the old 39% rate, or maybe even into the low 40's for everything over 10 million.  Anyway, personally I wouldn't lose any sleep if Bill Gates or Lebron James had to pay a modestly higher rate on their last millions of income than a senior professor and his doctor wife in Connecticut. To have the highest rate start at 250k seems quite a bit low to me, and I wonder if both sides can find some compromise about this.

How about the government collect all personal income, and then provide a stipend to each person.

[🐒Gods of Prosperity🔱🐲💸]

With all the talk about the expiring tax cuts, one argument GOP has been using about why the tax cuts for the highest bracket, now at 35% must stay at 35% and not go back to 39% is that so many small business owners will get hit.  I wonder if Dems should come up with a counter proposal, calling for retention of that 35% for everyone in that rate up till around 1 million income or even higher, maybe 5 or even 10 million, with the rate then going up to the old 39% rate, or maybe even into the low 40's for everything over 10 million.  Anyway, personally I wouldn't lose any sleep if Bill Gates or Lebron James had to pay a modestly higher rate on their last millions of income than a senior professor and his doctor wife in Connecticut. To have the highest rate start at 250k seems quite a bit low to me, and I wonder if both sides can find some compromise about this.

I'd consider something like this, though as a less than ideal solution. I'd be curious to know how much revenue would actually be raised. In any case I don't think I could support any tax rates above the Clinton era levels, even for the very rich.

[hotpprs]

Before they mess around with the tax brackets, the first order of business would be to eliminate the cap on Social Security payroll tax.
How can you even have a discussion of brackets when people are paying different percentages of payroll taxes before they ever get to paying Federal, State or property tax?
I realize why they have caps, so I am not going to get into that debate, but Social Security and Medicare have morphed into something different from what they were created for.
So those payroll taxes are just that, taxes. Not individual "personal investments in your own future" as I think they were first envisioned as, and why the cap on Social Security tax was first put in place.
The only problem with this is I don't think that employers should have to match the payroll tax beyond a certain amount if the personal cap is eliminated.

[dead0man]

Lots of good ideas in this thread and this "libertarian" could get behind some of them.

[Torie]

Raising rates a bit on those earning in taxable income more than $1,000,000 per year (I assume this won't include any such massive increases on capital gains and dividends, which would just be economically dumb, and end up not generating much revenue, while a whole lot of economic distortion, and movement offshore), is more symbolic than a real revenue raiser, that will do much to square the circle that will be tough to square - very tough, without a lot of pain.

[© tweed]

how about scaling tax brackets to the cost of living in the given area?

[Small Business Owner of Any Repute]

I am a firm believer that everyone should pay their fair share in taxes. While that "fair share" is a nebulous concept up for much interpretation, I generally believe that the rich do not. On the same token, though, there is no person alive who merits having a 0% tax rate.

Even the poor should pay taxes, even if it's just a pittance.

[True Federalist (진정한 연방 주의자)]

how about scaling tax brackets to the cost of living in the given area?

Why should we subsidize people for living in expensive areas?  Besides, the deductability of State taxes on the Federal income tax already serves as such a subsidy.

[angus]

how about scaling tax brackets to the cost of living in the given area?

Seems equitable.  I suppose it's a very difficult thing to do.  The data is easy to come by, but you'd have to convince folks to go for it.  Tell a family in New Mexico that because their 100K income gives them the same size house as people in Connecticut with a 400K income, that they ought to pay as much tax.  They'd argue--and they'd be correct--that vacations cost them more, because they have to drive all the way to DFW international airport, whereas the the Connecticut family only has to drive to JFK.  That sort of thing.  And anyway, no one twisted your arm and made you buy that house in Connecticut.  If you wanted, you could have a palace in the desert sands of the Navajo nation for what you paid for that modest A-frame house in New Haven.  

Lots of monkey wrenches in the clockworks.

[minionofmidas]

Besides, the deductability of State taxes on the Federal income tax already serves as such a subsidy.

State income taxes, or other taxes as well?

While that "fair share" is a nebulous concept up for much interpretation, I generally believe that the rich do not.

Absolutely.

You must be logged in to read this quote.

They do. Are you familiar with the concept of a sales tax? (Also, of course, why should anyone on welfare pay taxes? That's just fantasy shifting sums around between different gov't departments.)

[dead0man]

how about scaling tax brackets to the cost of living in the given area?

I agree.  Making people in expensive places pay more taxes does sound like a good idea.  Not really fair, but if it works for you.

[bullmoose88]

how about scaling tax brackets to the cost of living in the given area?

Why should we subsidize people for living in expensive areas?  Besides, the deductability of State taxes on the Federal income tax already serves as such a subsidy.

But don't you lose that deduction when you run into the AMT?

[Frink]

how about scaling tax brackets to the cost of living in the given area?

Besides the other arguments against it; the bureaucracy required to enforce this would be a monstrosity the likes of which even we've never come close to seeing.

Hows that for a full employment plan

[memphis]

Oh noes. People earning >1m/year aren't really rich. After they pay for their airplanes and mansions, they're struggling just like everybody else.