For the first time in the history of the United States, billionaires had a lower effective tax rate than working-class Americans.
this post was submitted on 03 May 2024
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This is super simple. In 2022 the US federal government brought in $2.18 Trillion in revenue from federal income tax. Roughly %66 percent of Americans make over $50,000 and the median income of that group of people is around $60,000 a year. If it was made illegal to be compensated by anything other than USD (paid with stocks, etc. and those loopholes). $0-$50,000 is not taxed. If you make over $50,000 you pay a flat %17 income tax period. That would bring in roughly $2.24 Trillion in federal income tax revenue. No loop holes, no deductions, just %17 off the top. Then you can disband the IRS which costs $16 Billion a year to run. Don't need the IRS if everyone pays the same. That would be totally fair. You make $60,000 a year you pay $10,200 a year, you make $1 Billion a year $170,000,000 a year.
Under your simplified system a person making 55k brings in less than someone making 49k. Which disincentives getting a raise at that salary range. There is a reason that currently we only tax money over the brackets set.
Progressive taxation isn't really the problem here though, our low tax on investment profit is. We should also probably enforce a 2% wealth tax on anyone making over a billion dollars.
We mostly don't want to do that — billionaires have a much greater ability to pay and are harmed far less by paying more. So it makes sense to have a progressive tax system, where the more you earn, the higher the marginal tax rate.
And you don't want to allow people to hide personal expenses as business expenses, and the likes, which is where much of the complexity of the tax code comes from.
Right now Billionaires don't have money just lying around to pay taxes with, it's tied up in owned business, properties, stocks, etc. I know, this is a part of the internet that just wants to eat the rich, I'm not one of them. They are just playing the game. The problem is the government allows them to play the game in such a way that is able to make them a lot more money. The problem is, the rules the government has made allows this to happen. If you drastically simplify the tax code, like to be one paragraph and eliminate the loop holes, it will settle itself out. The only way to do that though is to replace every person in Washington because they are taking advantage of it as well.
Billionaires can liquidate assets to pay taxes as needed — particularly income taxes, where that's easy.
If you took half of all the billionaires wealth in the US it would be worth 1 year of IRS tax revenue. Or two year's of our deficit. Then what?
The point is requiring them to pay a higher percentage because they've benefitted more from the way society is put together. Not to end all other taxation.