
Don’t Tax the Rich. Tax Inequality Itself. - robg
http://www.nytimes.com/2011/12/19/opinion/dont-tax-the-rich-tax-inequality-itself.html?src=me&ref=general
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Todd
This is an interesting idea but it would have several problems in practice. In
particular, it lumps the 'low end' earners of the top 1%--those earning
$330,000 per year--in with those earning millions. This would create a
significant drag on those people's income above that amount. Let's say there
was a 75% marginal rate in a given year. They would need to earn $4 to keep
$1.

This strikes me as a similar idea to Warren Buffet's proposed tax on the rich
(though his suggested bracket started at $1MM/yr). These taxes would
effectively prevent people just entering this range from ever amassing as much
wealth as the current crop of the super rich. I wonder why he didn't propose
this tax a couple of decades ago?

A simpler idea would be to have a straightforward progressive tax, such that
the lowest quintile payed something, anything (maybe 1%) and it went up from
there in uniform increments. As it stands, nearly 50% of taxpayers pay zero,
and the top 1% pay 40% of the total income tax of the US.

The tax system is completely broken. And it doesn't appear that it will be
fixed in the foreseeable future.

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chwahoo
I love creative policy ideas like this. It's an fascinating attempt to
engineer a carrot and stick motivate the rich to help make all Americans
better off. I'm not necessarily saying that I like to see highly engineered
policies put into practice (and there's an argument to be made that people
shouldn't be forced to have their livelihoods engineered), but it's fun to
think about them.

The question I have is: Under this tax policy, what could/would the 1%
actually do to ensure that the income of the 99% would grow at the same rate?
Would the economically rational thing be to ignore the law? (perhaps hoping
others would take action) Would they insist that more tax dollars go to
education? (or is that too forward thinking?) Would lots of workers find
themselves with immediate raises? Would the market hone in on previously
unknown ways to make workers valuable? Would the 1% only attempt to help the
top 10% or 25%, or would it be more fruitful to help the bottom X%?

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jholman
It would be counter-productive for the 1% to help the top 10% or 25%. They
would be incented to focus on the middle quintile. This, it seems to me, is
evidence that "median" is not the function of centrality that would be best.

