http://www.ustreas.gov/education/faq/taxes/taxes-economy.shtml
I recently did my taxes and I found this article rather intersting and confusing. The first confusing part that caught my eye was the marginal tax that they attempted to explain. I interpreted it as there are intervals on ones income that they have to pay a certin percent of that income as tax. So say there is a cut off at 6000 dollars, and at 6000 the rate jumps from 10 to 15 percent. This would mean that a person earning 6001 dollars per year would pay 10 percent of 6000 and 15 percent of 1 dollar as their marginal tax.
The article also states that this type of marginal taxing discourages new businesses and new ideas requiring large investments as even if a new business is succesful, the owner will end up paying a higher percentage of that profit back due to the marginal taxing.
4 comments:
Yep, that's exactly how our marginal tax rate works. It's basically designed so that a person who earns a higher income is paying a higher proportion of their wage to the government. The idea behind that is not necessarily to punish the rich, but to redistribute wealth.
In the US, there's a huge contingent who feel this is really unfair - that all people should be taxed equally (by percentage). The flat tax would make it so there are no tax loopholes, can't get out of paying it with having more kids, going to college, etc. Just flat out - pay this. Most flat tax proponents will argue that the gov would get more revenue with this.
I'm not sure. I know doing my taxes is confusing, so I'm glad there's a computer program for it.
And it still bothers me that they take so much. That's my old age settling in.
i think it should be a flat tax because, and this is just a generalization, people earning higher wages had to pay more for education. so if they have to pay more for education and pay more taxes, while people pay less for both, and for the most part have less skilled jobs. Is it really encouraging people do be all that they can be? I veiw it as punishing the hard working... but again, i realized i used generalizations..
Good article, now to put some more into it I would have to say that establishing a new business in general is much tougher during this time than it was 10 years ago, and not having any help from the government in terms of lay back on taxes doesn't help much either, although you can be delinquent 2 years when in a small business but that is just a whole different subject.
Also it will impact the rich much less as they are richer if you really go and think about it, because its very different if you are in the $100k (annual) area in terms of percentage than the 500k, as you get richer, the taxes matter just a little less because you have tons more cash where the tax came from. The flat tax idea is stellar though and really should be under the radar for things to adapt in the near future vs. a "rebate" check to stimulate the economy.
I agree with gan on this one. She makes a great point. It does seem like a punishment to give an accountant, for example, higher taxes than a bus driver. Now, I'm not shooting down bus drivers, but who do you think has to have more knowledge and work harder? Most would agree on the accountant. So since this accountant works harder, let's give her more taxes.. sorry, but this does not make sense to me and I don't think it ever will.
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