> There is no moral reason why a government deserves 50% of everything you have made.
Why? Personally I think the marginal tax rate should be much higher on the highest earners, for the simple reason that the impact of exact additional percentage point tax is far lower for a higher earner. To me the actual percentage is irrelevant. The relative impact is far more important.
If I had to pay 1 percentage points more tax, I wouldn't notice. I spend more than that on comics and takeaways, and also set aside 15-20 times more than that in savings and investments.
If I had to pay 5 percentage points it would begin to sting a bit, but I could still easily afford it. 10 percentage points more would start to be painful but still doable.
In fact, while I'd be complaining and whining about it at that point, I could manage 50% tax quite easily (I actually pay about 32% combined income tax and national insurance, despite being far into the 40% income tax threshold, and earning enough to be in the top 10% UK earners or so)
Meanwhile I have neighbours that would have to cut down on their food budget if their tax rate went up 1%, despite paying at least 10 percentage points less than I do, and many people in the UK would struggle to keep modest accommodation and food if they paid more than 20%.
I don't find it at all unfair that I pay more than them, not least because the only reason I can make what I do is that there is a functioning society around me that can afford my services.
> Personally I think the marginal tax rate should be much higher on the highest earners, for the simple reason that the impact of exact additional percentage point tax is far lower for a higher earner. To me the actual percentage is irrelevant. The relative impact is far more important.
So, you define a fair tax system as one whose perceived impact is identical across the tax base.
I define it as one where people pay in proportion to the benefits they receive. One can, indeed, argue that a rich man receives more benefits than a poor man, since his larger fortune is protected, and indeed due to his connexions he himself is more likely to be able to call on the protection of his state. I'd bet that it's linear or sublinear, though, and surely not superlinear (which is the case with progressive tax systems).
I find it entirely irrelevant whether or not the tax system is "fair" - fairness is inherently entirely subjective -, as long as it taxes based on income level (rather than e.g. race or other irrelevant factors).
What matters to me is if it optimizes for the welfare of society as a whole. And before you ask, I believe that alone is sufficient to prevent excesses like taxing higher earners to the point where they make less than lower earners, because people would in that case opt to earn less, and so it would in fact not optimize for happiness of society as a whole as it would reduce tax revenue despite increasing the perceived tax burden.
Whether the actual marginal tax rate is 99% or 1% is irrelevant to me in that context, if it achieves that goal (though I believe a marginal tax rate of 99% would be counter-productive, I do believe they could be substantially higher than most places today). I say that as someone who would be likely to deal with the effect if marginal tax rates went up.
As it happens, income/wealth is demonstrably only extremely weakly correlated with personal happiness once very basic needs are met (if you have housing, and food, basically), and as long as things are roughly as they used to or slightly better year over year. Steady improvement has a vastly higher impact on peoples happiness than absolute levels.
That, to me, makes it morally acceptable - pretty much a moral imperative - for a good society to structure taxes to maximize the return from higher earners over lower in order to reduce suffering for those with the least and to maximize the development of society as a whole. Not just because it would help those one the bottom, but because contrary to trickle down, trickle up actually works, and a trickle effect has a far more positive effect on happiness than sitting on a hoard of cash.
Setting marginal tax rates then becomes an optimization problem.
"I define it as one where people pay in proportion to the benefits they receive"
I believe that countries want to survive as entities, and being fair is not necesarily the best course of action. If rich people pay more, but they don't do anything aggresive in response, that's ok. Surely most of the population will be happier - and, in return, won't rise up and kill the rich. If the amount of capital going out of the country starts being so aggresive that it is dangerous for the country, the country will end up responding.
Why? Personally I think the marginal tax rate should be much higher on the highest earners, for the simple reason that the impact of exact additional percentage point tax is far lower for a higher earner. To me the actual percentage is irrelevant. The relative impact is far more important.
If I had to pay 1 percentage points more tax, I wouldn't notice. I spend more than that on comics and takeaways, and also set aside 15-20 times more than that in savings and investments.
If I had to pay 5 percentage points it would begin to sting a bit, but I could still easily afford it. 10 percentage points more would start to be painful but still doable.
In fact, while I'd be complaining and whining about it at that point, I could manage 50% tax quite easily (I actually pay about 32% combined income tax and national insurance, despite being far into the 40% income tax threshold, and earning enough to be in the top 10% UK earners or so)
Meanwhile I have neighbours that would have to cut down on their food budget if their tax rate went up 1%, despite paying at least 10 percentage points less than I do, and many people in the UK would struggle to keep modest accommodation and food if they paid more than 20%.
I don't find it at all unfair that I pay more than them, not least because the only reason I can make what I do is that there is a functioning society around me that can afford my services.