I wrote a BlogPost about a rational progressive IncomeTaxSystem with Mincome. · 4:44am Apr 14th, 2016
I wrote a BlogPost about a rational progressive IncomeTaxSystem for my group the Skeptics' Guide to Equestia. I figure that my followers might be interested, so I repost it:
It is almost TaxDay in the USA (YYYYY-04-15). I present a rational TaxSystem for IncomeTax:
TaxOwed = ( Income / TaxRate ) - ( Constant + Deductions )
It is that simple. Let us throw in some dumby numbers:
TaxRate = 2
Constant = 10,000.00 U$D
Ignoring deductions, the TaxOwed can be seen here:
TaxOwed = ( Income / 2 ) - 10,000.00 U$D
As of can see, if one has an income of 0.00 U$D, one receives + 10,000.00 U$D, not enough to live, but will keep one going until one gets back on one's feet. This is called mincome.
As income increases, the TaxOwed approaches 50%. For high incomes, the tax is pretty flat but still a bit progressive. Let us look at how the deductions help the typical working pony:
Let us suppose that we have 2 ponies earning 30,000.00 U$D annually. One lives rent free with parents; while the other, pays 1,000.00 U$D / month:
The rent-free pony has no deductions:
( 30,000.00 U$D / 2 ) - 10,000.00 U$D = 5,000.00 U$D
This pony owes 5,000.00 U$D; so now, has 25,000.00 U$D after taxes.
The rent-paying pony pays thus after deductions rent:
( 30,000.00 U$D / 2 ) - ( 10,000.00 U$D + 12, 0000.00 U$D ) = - 7,000.00 U$D
The rent-paying pony spent 12,000.00 U$D on rent, so the 30,0000.00 U$D became 18,000.00 U$D after rent and after receiving the - 7,000.00 U$D in tax, this pony has 25,000.00 U$D.
Both ponies have the same amount of money after taxes and rent.
Rich ponies are always looking for loopholes to get out of paying their fair share. I have hacks for fixing that:
* Reduce the total deductions on the books to 99.
* Allow only a score (20) deductions on each return.
Limit the value of all deductions on a TaxReturn combined to 1,000,000.00 U$D.
We have too many loopholes. limiting the deductions on the books to double-digit numbers makes it hard to slip in deductions.
The average working pony qualifies for only 5-10 deductions. I figure that an honest rich pony should only qualify for someteen deductions (a dozen (12) to a score (20) deductions).
Rich ponies overstate their deductions. We should limit them to a total value of 1 million U$Ds so that rich ponies will have to pay their fair share.
I'm down with this.
3869450
Oh good. I feared that this BlogPost would be too mathematically wonky.
¡Thanks!
...
And what about the lottery winners? The inheritors? The anomalies?
What then?
4270075
I am glad that you asked:
Notice that this is my incometax —— ¡not my inheritencetax!
This is a 1st step. I plan to have later versions with square roots in it, but the rich would block those in the opening stages, so I use a linear equation now. Basically, to start, ponies get n% of their income plus mincome after tax. in future versions, ponies would get the squareroot of a constant pluse mincome after tax. Let me give an example:
Let us suppose that the mincome is 12,000.00 U$D/year (a check for 1,000.00 U$D/month (not enough to live, so that ponies have an incentive to work, but enough to make the lives of the working poor bearable))). We take halfe of income in taxes. A pony earning 1,000,000,000.00 U$D, after taxes and with mincome has 500,012,000.00 U$D. That aamount of money is obscene. Let us suppose that the constant is 100,000.00 U$D:
1,000,000,000 is 10,000 units The squareroot of 10,000 is 100. 100 Times a 100,000 is 10,000,000. Plus 12,000 is 10,012,000.
After income tax and mincome, somepony earning 1,000,000,000.00 U$D has 10,012,000.00 U$D. That is a much less obscene income.
¿How would this effect working ponies?:
Let us suppose that one works 8 hours daily, 5 days a weekk and 50 weeks annually. One earns 20,000.00 U$D annually:
20,000.00 U$D is .2 units. The square root of .2 is .447,213,595. Times 100,000 is 44,721.36. Plus 12,000 is 56,721.36.
Somepony earning 20,000.00 U$D would have 56,721.36 U$D after taxes.
Notice that this system helps the poor, contains the excesses of the rich, and always encourages work because higher earners always have more money after taxes and mincome than lower earners, just not obscenly so.
You wondered about the estatetax. That is eay:
The 1st million is free, so ponies can keep the familyfarm. After the 1st million, they can can keep the squareroot of units of 1 million:
Let us suppose that the AppleParents die. SweetAppleAcres is worth 80,000.00 U$D. This is less than 1,000,000.00 U$D, so MMister Big MacIntosh, Miss AppleJack, and Miss Apple Bloom do not have to pay estatetax.
Mister Filthy Rich dies. His netwealth is 10,000,000.00 U$D. The 1st million is free and we calculate in units of millions. The squareroot of 9 is 3, so Miss Diamond Tiara receives 3,000,000.00 U$D plus the free 1,000,000.00U$D for a total of 4,000,000.00 U$D. Poor ponies need not worry about estatetaxes, but the keep-the-squareroot-of-units-of-a-million-with-the-1st-million-free keeps a few rich families from owning everything.
4271052 I'm not sure about this. It seems solid, but I still prefer the current system.