This is not a brand new article but certainly an idea worthy of exploring since we have talked at lengths about how to tax effectively.
<<What we call the Brandeis Ratio — the ratio of the average income of the
nation’s richest 1 percent to the median household income — has
skyrocketed since Ronald Reagan took office. In 1980 the average
1-percenter made 12.5 times the median income, but in 2006 (the latest
year for which data is available) the average income of our richest 1
percent was a whopping 36 times greater than that of the median
household.
Here’s how the tax would work. Once a year, the Internal Revenue Service
would calculate the Brandeis ratio of the previous year. If the average
1-percenter made more than 36 times the income of the median American
household, then the I.R.S. would create a new tax bracket for the
highest 1 percent of income and calculate a marginal income tax rate for
that bracket sufficient to reduce the after-tax Brandeis ratio to 36.
This new tax, if triggered, would apply only to income in excess of the
poorest 1-percenter — currently about $330,000 per year. Our Brandeis
tax is conservative in that it doesn’t attempt to reverse the gains of
the wealthy in the last 30 years. It is not a “claw back” tax. It merely
assures that things don’t get worse.
A key aspect of our proposal is the tax’s automatic nature. Congress
need only act once to protect our future. Just as our tax brackets
automatically adjust with the inflation rate, Congress could specify
nondiscretionary conditions under which the Brandeis tax would
automatically go into effect.>>
Do you think it is more feasible? If so why such an idea proposed in 2011 has not been in effect?
If such tax were implemented today, it would not be effective due to the loopholes in the current tax system in the US. This kind of tax would just encouraged the 1-percenters to send more money to tax safe havens to avoid it.
ReplyDeleteI feel like this tax would not work because it is simply taking money away from the wealthy. If you really want to reduce income inequality through taxing, I believe a better method would be the negative income tax that was proposed by (brace yourself, Rasheed) Milton Friedman. Here is how the tax works: If your income were above than a certain level, you would have to pay taxes. If your income were less than a specific number, you would receive tax subsidies or tax exemptions.
However, the only tax code I would support is a flat tax rate on all forms of income because it is fair, easy to implement, and has the fewest loopholes compared to other tax codes if implemented properly. Flat tax rates levels the playing field and a leveled playing field leads to greater income equality in the long-run.
I agree with Tyler, a flat tax rate is simply the best option. It is easy to both implement and comprehend. It dictates that all Americans contribute an equal percentage of their income. I believe the wealthy should not be "penalized" for making a great deal of money with a higher tax rate. That being said, our current system allows for people with the largest amounts of wealth to circumvent taxes while the least fortunate are incapable of doing so and are barely scraping by which is wholly unacceptable.
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