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by bigfartchili 2729 days ago
I openly admit I am a republican but I have never understood why there are not more tax brackets. A person making 100k per year is not even close to the same as a person making 100m per year but are taxed at the same rate.
2 comments
wafflesraccoon 2729 days ago
I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income?
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noobiemcfoob 2729 days ago
Because income tax in the first place is a compromise with people who don't want that system at all. So you get a solution that isn't what anyone wants.
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dragonwriter 2729 days ago
> I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income?

You could use a function with a smooth derivative, and since a table is used in application it would have no effect on practical complexity of tax prep, though it would make intuitive grasp even harder (and it's already bad.)

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LyndsySimon 2729 days ago
What we have now is effectively "a function to calculate your taxes based off your total income" - it's just that the function treats different portions of income differently.
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AnimalMuppet 2729 days ago
Hmm. Maybe use a log scale? Every factor of 10 in income, the incremental tax rate goes up a percent or three. If 35% is the top now, and starts at $100K (numbers made up because I refuse to grovel through the IRS code in order to make an HN post), and if the delta is 3% per factor of 10, then we get 38% at $1M, 41% at $10M, 44% at $100M, 47% at $1B (income, per year). I'll stop there, because I'm not sure anyone has ever reported $10B income in one year ever in history.

If you made the delta 9%, that would get you 44% at $1M, 53% at 10M, 62% at $100M, and 71% at $1B. This gets you in the neighborhood of Ocasio-Cortez's idea, but without one big step to get you there. (I suspect that it would also raise considerably less money than her plan...)

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tracker1 2729 days ago
The problem is that enough types of activity are excluded from taxation. It would be better to have a 0.25% margin tax on all financial transactions or currency transfers. Nobody could avoid it, and some of the micro-trades wouldn't happen as much.

Yes, then you still have the cash loophole, but most people aren't using cash.

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