Tuesday, August 23, 2011
Warren Buffet wants to pay more taxes: my tax idea- progressive flat tax
Ok, part of the problem is how complicated the tax codes are. There are loop holes that people will take advantage of along with the law of unintended consequences. You can refer to either the book or movie of “freakconomics” A flat progressive tax. I actually believe I read about a version of this in Lies and The Lying Liars Who Tell Them - A Fair and Balanced Look At The Right. The tax rate is paid at a graduated level on each portion of your income- just as an example-so lets say 5% on the first 20,000, 10% on up to 21,000-100,000, 20%- 200,000 etc.
For lets compare two people one making 40,000 and one make 175,000 (ignoring Social Security and states taxes).
Person 1: 40,000
$2,000 on the second $20,000
for total taxes of $3,000 and a net of $37,000Person 2: $175,000
would pay $1,000 on the first $20,000
$8,000 on the next $80,000
and then $15,000 on the final $75,000
for total taxes of $24,000 and a net of $151,000
Check out Malcom Gladwell video.
The tax rate used to be 90% for income of 2 million dollars (which would be about 15 million)