What should be the highest marginal federal tax rate?

[bullmoose88]

Over 60% for every dollar earned say over 1.5 million.

I'd probably have it increase pretty severely as you go up the scale...my over tax curve would probably be fairly flat and then increasing sharply as you get over 300,000/year (Joint say 500,000)...I'd also want to throw in cost of living into the equation...300,000 in the Boswash isn't the same as the pissant praries...so if you're living in a cheap area and make a ton of $$ (if that's possible)...jack up the tax.


Someone has to pay for the bloated government they voted for.

[bullmoose88]

Highest: 18%
Lowest: 18%

Because flat tax schemes work soo well.

The normal case cited in favor is Russia...but I wouldn't be surprised to see oil wealth propping up that tax scheme.

[bullmoose88]

A really vague guideline for what I'd like to see:

0% - <$10,000/yr
10% - $10,000-50,000/yr
20% - $50,000-100,000/yr
30% - $100,000-350,000/yr
40% - $350,000-1,000,000/yr
50% - >$1,000,000/yr

Single, or joint return?

[bullmoose88]

Highest: 18%
Lowest: 18%

Because flat tax schemes work soo well.

The normal case cited in favor is Russia...but I wouldn't be surprised to see oil wealth propping up that tax scheme.

I'm not sure we should be looking to Russia as a model for much of anything anyway, frankly, nor would I trust the numbers put out by the Russian government.

I don't disagree.  Hell I think any sort of tax scheme could work in russia now with oil as expensive as it is.

[bullmoose88]

Over 60% for every dollar earned say over 1.5 million.

I'd probably have it increase pretty severely as you go up the scale...my over tax curve would probably be fairly flat and then increasing sharply as you get over 300,000/year (Joint say 500,000)...I'd also want to throw in cost of living into the equation...300,000 in the Boswash isn't the same as the pissant praries...so if you're living in a cheap area and make a ton of $$ (if that's possible)...jack up the tax.


Someone has to pay for the bloated government they voted for.

What is so magical about 300K under than that few people earn more than that? 

Arbitrary number I used to demarcate some line between the upper middle and upper classes...given my preferences for tax that factors in cost of living, that number (once a study finds the national average) can vary between regions (higher in socal and say boswash for example).

[bullmoose88]

Some of these proposed tax brackets in this thread just don't make sense.  After taxes, people who make $1,000,000 would have less than somebody who made $750,000.  That kind of variance in the tax system would completely eliminate the incentive of increased revenue and ruin our economy because business owners will start laying off workers and downsizing, not because it is better for the business, but because the less you own the better off you are in these tax systems. 

Do you have an example here?  Because with marginal tax rates both the 750k earner and the 1M earner pay the same amount of tax on the first 750,000 of income (assuming each has the same type of income)...its for the additional 250k where the 1M earner pays more...the 1M earner still nets more money than the 750k earner.

[bullmoose88]

Some of these proposed tax brackets in this thread just don't make sense.  After taxes, people who make $1,000,000 would have less than somebody who made $750,000.  That kind of variance in the tax system would completely eliminate the incentive of increased revenue and ruin our economy because business owners will start laying off workers and downsizing, not because it is better for the business, but because the less you own the better off you are in these tax systems. 

Do you have an example here?  Because with marginal tax rates both the 750k earner and the 1M earner pay the same amount of tax on the first 750,000 of income (assuming each has the same type of income)...its for the additional 250k where the 1M earner pays more...the 1M earner still nets more money than the 750k earner.

Yeah, I just made up 750k to 1 mil, but still there are some areas where the value of thousands of dollars is lost.  (Snowguy's where a 450k earner at 50% [225k] makes more than a 550k earner at 60% [220k]).

Thats not how a marginal tax system (like the US's) works.  Someone check my calculations here.

Snowguy's tax system.

Poverty line (Let's say 0 for simplicity) to $25,000/year 10%
25,000-$40,000/year 15%
$40,000-70,000/year 20%
$70,000-90,000/year 25%
$90,000-150,000/year 30%
150,000-250,000/year 40%
250,000-500,000/year 50%
500,000-1,000,000/year 60%
1,000,000+ 65%

450k Earner...Assuming no deductions, exemptions, credits...I.e. Adjusted Gross=Salary

Pays 10% on the first 25k=2,500
15% on the next 15k= 2,250
20% on the next 30k=6,000
30% on the next 60k= 18,000
40% on the next 100k=40,000
and 50% on the remaning 200k of income=100k

450k Earner pays=$168,750, Net Income after Taxes=$281,250.

550k Earner.


Pays 10% on the first 25k=2,500
15% on the next 15k= 2,250
20% on the next 30k=6,000
30% on the next 60k= 18,000
40% on the next 100k=40,000
50% on the next 250k of income=100k=125,000
and 60% on the remaining 50k of income=30,000

550k Earner pays=$223,750 Net Income after Taxes=$326,250.

Another important calculation:

Average taxes paid as percentage of gross income.

450k earner: 37.5%
550k earner: 40.7% (40.68181....)

So as I've shown what people are actually paying in taxes isn't that close to their highest marginal rate.  Even in a system like this where there aren't special characterizations for capital gains (5/15% gains, 25% Property, 28% collectibles etc).

[bullmoose88]

Anyway, less than 30 percent. But I'm presupposing a drastically smaller government.

Interesting answer.  I guess my question would be, if I can word it properly, assuming political forces or considerations prevented you from shrinking the government (or having an unbloated government)...what would be your highest marginal rate with a bloated debt carrying government?

I mean, I advocate a pretty high top marginal tax rate on the very top incomes.  I, unlike some here, don't wish to penalize the rich but at least I'd hope that would generate the revenue to well...pay for the $hit we're just borrowing for.  Like Phillip, with a smaller less debt saddled government, the rates would be much much less.