The [proposed new tax] plans also call for raising the top marginal income tax rate to 39.6% from the current 37%. … result is a top marginal federal income tax rate of 46.4%. … In New York City, the combined top marginal state and city tax rate is 14.8%. So New York City taxpayers who earn more than $5 million a year would face a combined city, state and federal marginal rate of 61.2% under the House plan. (
Perhaps you should suggest this to the Prospera team. They didn't want to have income taxes, but they were compelled to have them to stay in compliance with international tax haven treaties (see https://docs.google.com/doc... ), so I imagine they'd be very interested in ways to mitigate the harm of income taxes.
I KNOW. But so what. The point is you can do almost the same thing right now by saving or investing. So there'd be a timy increase in investment choice. It's hardly a revolution.
I strongly suspect that at the upper levels of taxation work is discouraged much less by high taxes than one would expect because at that point your working for the love of working and for absurd levels of status.
Your relative status won't decline as long as all your rich friends also have to pay the tax hike!
I said this lowers their tax RATE.
Buying your own taxes in an auction doesn't lower your tax - it means you are paying a portion of your tax early.
People earning over 5 million a year are not working because they need money. They are working for status. They earn lots because of who they know and who pays attention to them. They are part of the elite you say are bad at most things, and don't deserve their position in the social structure.
So according to your objection to elites, taxing them should bring much social value by limiting their ability to waste money on high status goods and activities and to some degree reducing the difference between the elites and others.
The obvious way to reduce the wealth-destroying effect of taxation would be to design a tax system to maximize the revenue collected while minimizing the work discouraged (measured by its value which = wages). Revenue collected = population x the average tax rate, while work discouraged = population x the weighted average of each taxpayer's marginal tax rate weighted by his marginal pay rate.
Unfortunately, any modern progressive income tax gives near pessimum results for both. It gives a low average tax rate while imposing the highest tax rates on exactly the people whose labor is worth the highest pay rates, thus giving them the most reason to stay home.
A flat-rate income tax would be an improvement, but better still would be a consumption tax such as a sales tax, especially if it excludes necessities such as food and medicine. A sales tax would not discourage work because it does not increase with work -- it would merely discourage voluntary consumption in favor of saving. (A value-added tax does not share this advantage since if you do more work, your customers will pay more, thus indirectly increasing the cost to them of employing you.)