The tax code has an upper limit beyond which taxation is limited when it should be increasing as exponentially as income and wealth increase.
The tax code in its current form is called a progressive tax code even though much income at higher levels is not taxed and there are gaps in taxation. Yes, there are marginal rates that seemingly apply to all but are those marginal tax rates fair and proportional? I don’t believe so. And, marginal tax rates only go up as high as 37% on $539,900 or more. So, taxes above 540k are capped at that rate, no matter how much higher the income is. That is NOT progressive taxation. It is taxation that contracts and plateaus as income for the small minority of upper income tax payers remains on an upward trajectory and is not taxed proportionally as income increases. There aren’t enough tax brackets or marginal rates in the current tax code that would account for a fair taxation of all income.
You claim the tax code benefits everyone when in fact upper incomes are taxed, proportionally, far less than lower incomes. You say that there is a sliding scale and that “the low income group” have deductions that offer it an advantage. What are those deductions? And what advantage are you talking about? Even though their tax rate is lower, even the poorest people have a marginal rate of 10% on the first $10,275 they earn as income. Is that fair? If it were you, would you be cool with 10% of your income of 10k being taken away as income tax? Would you think that’s fair?
There is a larger tax burden on the poor and middle class than there is on the wealthy. I do not know you. I don’t know anything about you except that you defend the current tax code as being fair. It doesn’t matter to me how rich or wealthy you are or where on the spectrum of wealth and income you are. And I may be having a discussion with someone who is a middle class person like me. My argument is not personally directed at you nor is it a critique of class or a judgement about how much money or wealth you have. My concern is about a tax code that I believe is unfair, inconsistent, unevenly applied, and strangely managed, and one that does not tax all of us fairly or in a way that makes sense.
How much money do people who have a lot of money need? If a person/family has enough wealth to ensure that not only will all of its basic needs be met for the rest of this lifetime, but also that their descendants, if they manage the estate well and there are not other misfortunes or turns of fate, may be able to live comfortably and without having to work for generations? How much money is it necessary for a person/family to amass and hoard? Beyond what point is it justifiable to continue to amass and hoard wealth?
The reason I ask these questions is because we live within a social contract. What responsibilities and obligations do people have when they live within a social contract? We pay for things we need as a society with taxes that we all pay. If everyone paid his or her fair share of taxes we’d all be better off and there would be enough money generated for us to be able to work on fixing all of our problems if only we had enough money to do so. We’d all be better off. Even those paying more taxes.
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