katisara:
Why does it matter? We have a parabola tax. The poor pay the little, the rich pay little, only the middle class pays a high percentage.
Yes, agreed. Not talking so much about what we have now, but looking at alternatives which might be better.
katisara:
If your concern is you're taking food money, then only institute the flat tax on dollars above $20k (or whatever).
I'm not necessarily opposed to that idea, though some in favor of a flat tax might be, I think.
Falkus:
But one could make the argument that it's not fair; as the more money you have, the less valuable it becomes. A ten dollar bill is much, much more valuable to a man making ten thousand a year than it is to a man making ten million a year.
Yeah, that's more or less what I'm talking about--diminishing marginal utility of a dollar as income increases.
silveroak:
Taxation can only be based on objective value, not subjective. One could also make the argument that the man who gets paid $10,000 a year draws such a large sallary because he has put in effort to develop his marketability because money is important to him, and that accordingly teh $10 bill is worth more to him than the person who makes $10,00 a year, which s why he has collected so may more of them.
The point in this is that taxes have to be based on objective criteria, not how you presume someone else feels about something.
True, we can only base it on objective criteria, but we can form a system which attempts to account for subjective differences, and acknowledge that it won't be perfect (but might still be better than not even trying).
Basically, what I'm aiming at here, is that for someone who makes $20k a year, doubling their salary to $40k will result in a major change of their lifestyle. Someone making $2M getting a raise up to $4M probably wouldn't change their lifestyle as drastically (though it would certainly change), and Bill Gate's lifestyle probably isn't going to change much at all, no matter how much you increase his income. Thus, just looking at the fraction of the income we pay misses hides the fact that for some people giving up X% of their income will be affect their lifestyle in a bigger way than it might affect someone else to give up the same percentage of their income. Coming up with a system to quantify it all would be difficult, no doubt, but assuming for the moment we could come up with a decent approximation, is the basic idea one worth considering?