Great Idea: Max Tax
Alternate MAXIMUM Tax? I like it. No, I love it! Here's an excerpt from John H. Cochrane's excellent piece:
I like half, but the principle matters more than the number. Once the country settles on a number, each of us gets to add up everything we pay to government at every level: federal income taxes, yes, but also payroll (Social Security, Medicare, etc.) taxes, state, city and county taxes, estate taxes, property taxes, sales taxes, payroll taxes and unemployment insurance for nannies, household workers, or other employees, excise taxes, real-estate transfer taxes, and so on and on, right down to your vehicle stickers and those annoying extra taxes on your airline tickets.
On April 15, once this total hits the alternative maximum tax, you've done your bit and federal income taxes can take no more. You compute federal income taxes as usual, but then you get to reduce the "tax due" that the total is less than the alternative maximum.
The zombies howl that the top federal tax bracket is still "only" 40%. Surely "the rich" can contribute a bit more? They forget that the economic damage of taxes comes from the total tax bite, not just the federal income tax.
I read the same article just now. And I disagree.
ReplyDeleteIf a maximum tax limit is enacted, the maximum tax is exactly what you will get. Forever. Or at least until the next revision upward of the max-tax because, you know, the more wealthy need to "contribute a little bit more" to lighten the load on the less fortunate who are paying at the same rate as Warren Buffet . . . .
Not to mention that those of us living in States with no income tax will end up paying the same tax bill. Meaning, of course, that there will be no more competition among states to reduce the tax load on its citizens. With that competitive driver removed, all will end up in the same poorhouse (and those of us in Texas will end up funding the federal government on behalf of New York and California -- a perverse result for many of us Texans who are already tempted by calls for secession).
And finally, under no circumstances whatsoever should government be consuming (and redistributing) 40% of the earned wealth of the nation.