Disposable income tax

[fezzyfestoon]

I may sound foolish as this is just a raw thought, but why not base tax rates on the percent of income that's disposable (being defined pre-taxes obviously)?  Use a goods basket for an average amount spent depending on people in the household and such and find out how much of their income is spent on that.  The lower the percentage of income spent on necessary goods, the higher their income taxes.  And deductions can be added in for people with special needs.  Sounds fair, right?

[memphis]

That's more or less what we have. Progressive. Deductions and credits to account for specific situations. I'd like to see an increase in progressivity, but the powers in DC seem determined to go the other way.

[fezzyfestoon]

Yeah, it is basically the same, I just figured it would be a less roundabout and more accurate way of doing things.  Plus, since we essentially just subtract the expenses and base the taxation on the remaining amount, by doing it this way we could create a rolling percentage instead of using brackets.  I am still thinking about it, so it's not exactly well-thought out yet.  Just bouncing ideas around.  And I definitely agree there should be a more progressive system.  It only makes sense.

[Teddy (IDS Legislator)]

Who decides what's needed?

[True Federalist (진정한 연방 주의자)]

Making the tax code more complicated in the name of fairness is how we ended up with the mess known as the Internal Revenue Code in the first place.  Count me out.

[Lief 🗽]

I think it would be easier to just exempt the first $20,000 or so of one's income from income tax. That should cover what one needs to pay for the "essentials" (food, housing, etc.) and the rest would be by definition disposable income.

[memphis]

I think it would be easier to just exempt the first $20,000 or so of one's income from income tax. That should cover what one needs to pay for the "essentials" (food, housing, etc.) and the rest would be by definition disposable income.

It already more or less is between the standard deduction, the personal exemption, the EITC, and the Making Work Pay Tax Credit.

[Del Tachi]

The easiest way to accomplish anything like this would be to abolish federal income tax and replace it with a high, national RETAIL sales tax--between 30 and 35 percent.

That way, the burden is shifted from big earners to big spenders...

[Hatman 🍁]

The easiest way to accomplish anything like this would be to abolish federal income tax and replace it with a high, national RETAIL sales tax--between 30 and 35 percent.

That way, the burden is shifted from big earners to big spenders...

Why do you hate the middle class?

[dead0man]

I think it would be easier to just exempt the first $20,000 or so of one's income from income tax. That should cover what one needs to pay for the "essentials" (food, housing, etc.) and the rest would be by definition disposable income.

That's been my thoughts on the matter for a long time now.  Hell, knock it up to 30 or even 40k.  Pay a reasonable rate on the next 100k or so then knock it up a fair amount for the next million, then go funking crazy with it.  So something like:
0% on your first 40k
10% in the 40-150k range
20% in the 150-1M range
35% in the 1M to 10M range
60% on anything past 10M (I'd even take a higher percentage here)

(I have no idea if those numbers would actually work or not, just a general idea....feel free to poke holes)

Keep deductions for charity (real charities, not the NRA, ADL or NAACP) and kids, but dump them for housing, "business expenses" and what not.  Add in a forced balanced budget every year, adjusting the numbers (for EVERYBODY) the next year as needed.  That should keep spending inline.

[Gustaf]

You can't have a fuzzy definition, because that invites people to do all kinds of cheating on taxes. Unless there are very good arguments for an alternative, you want the tax system to be simple and activity-neutral, so as to minimize its effect on peoples' behaviour.

And as pointed out progressivity, especially having a 0 rate in the lowest bracket basically achieves this anyway. That's how the Swedish system works, although the lowest bracket is probably too narrow.

For example, I worked part-time last year earning about $10 000. On that I paid about 10% in tax. And that's in Sweden.

[Antonio the Sixth]

I think it would be easier to just exempt the first $20,000 or so of one's income from income tax. That should cover what one needs to pay for the "essentials" (food, housing, etc.) and the rest would be by definition disposable income.

That's been my thoughts on the matter for a long time now.  Hell, knock it up to 30 or even 40k.  Pay a reasonable rate on the next 100k or so then knock it up a fair amount for the next million, then go funking crazy with it.  So something like:
0% on your first 40k
10% in the 40-150k range
20% in the 150-1M range
35% in the 1M to 10M range
60% on anything past 10M (I'd even take a higher percentage here)

(I have no idea if those numbers would actually work or not, just a general idea....feel free to poke holes)

Keep deductions for charity (real charities, not the NRA, ADL or NAACP) and kids, but dump them for housing, "business expenses" and what not.  Add in a forced balanced budget every year, adjusting the numbers (for EVERYBODY) the next year as needed.  That should keep spending inline.

[dead0man]

Democrats in Nebraska are much less crazy than Democrats on the whole so that's not as offensive as it would be if I still lived in say, Illinois.

[Antonio the Sixth]

Seriously though, is there anybody outside of liberal democrats who supports a top marginal rate above 40% ?

[dead0man]

I support it as long as it's pretty freaking high limit.  Especially if the nation really needs money.  I'd rather waste get cut first, but that's a lot harder to do than it is to type out (or say).

[Lief 🗽]

I think it would be easier to just exempt the first $20,000 or so of one's income from income tax. That should cover what one needs to pay for the "essentials" (food, housing, etc.) and the rest would be by definition disposable income.

That's been my thoughts on the matter for a long time now.  Hell, knock it up to 30 or even 40k.  Pay a reasonable rate on the next 100k or so then knock it up a fair amount for the next million, then go funking crazy with it.  So something like:
0% on your first 40k
10% in the 40-150k range
20% in the 150-1M range
35% in the 1M to 10M range
60% on anything past 10M (I'd even take a higher percentage here)

(I have no idea if those numbers would actually work or not, just a general idea....feel free to poke holes)

Keep deductions for charity (real charities, not the NRA, ADL or NAACP) and kids, but dump them for housing, "business expenses" and what not.  Add in a forced balanced budget every year, adjusting the numbers (for EVERYBODY) the next year as needed.  That should keep spending inline.

Wow, you and I agree completely.

[memphis]

I think it would be easier to just exempt the first $20,000 or so of one's income from income tax. That should cover what one needs to pay for the "essentials" (food, housing, etc.) and the rest would be by definition disposable income.

That's been my thoughts on the matter for a long time now.  Hell, knock it up to 30 or even 40k.  Pay a reasonable rate on the next 100k or so then knock it up a fair amount for the next million, then go funking crazy with it.  So something like:
0% on your first 40k
10% in the 40-150k range
20% in the 150-1M range
35% in the 1M to 10M range
60% on anything past 10M (I'd even take a higher percentage here)

(I have no idea if those numbers would actually work or not, just a general idea....feel free to poke holes)

Keep deductions for charity (real charities, not the NRA, ADL or NAACP) and kids, but dump them for housing, "business expenses" and what not.  Add in a forced balanced budget every year, adjusting the numbers (for EVERYBODY) the next year as needed.  That should keep spending inline.

Wow, you and I agree completely.

10% all the way up to 150k? That's way too low for the government to continue doing anything.

[dead0man]

Yeah probably....hows about
10% from 40-80
20% 80-150
30% 150k-1M
40% 1M-5M
50% 5M-10M
every dollar over that at 60%

If my memory and brain works, I think most people would pay less with this plan.  I know I would.

[Free Palestine]

The one problem I have is that what constitutes a "necessity" is relative, and not really something that should be defined by the government.

[specific_name]

The easiest way to accomplish anything like this would be to abolish federal income tax and replace it with a high, national RETAIL sales tax--between 30 and 35 percent.

That way, the burden is shifted from big earners to big spenders...

That's crazy. The poor and middle class have to spend most of their income to survive and will be taxed out of existence. Meanwhile the already wealthy will get even more wealthy, as they can afford to save and shelter their assets. This idea would completely destroy our consumption based economy and put domestic retailers out of business in no time.