Tax discussion thread (U.S. focused)

[Final-Fan]

Thank you for the explanation. I'll concede for the sake of argument that my idea about the study is completely ill-conceived. Certainly I haven't given it enough thought to make it pass for professional.

(But no, I'm not assuming my conclusion:  my third factor is not what I'm trying to figure out in the experiment. Obviously increased income (normally) has practical use in benefiting a person. The point we have been debating, which I thought could be found out in a study, is whether this practical benefit is proportional to increased income generally on a constant ratio, or whether the benefit is proportionally greater to increases in income at a lower level (above bare survival income) than at higher levels. The fact that we would be looking for ratios without assuming they were constant is not the same as assuming they were not constant.

(Is there a critical flaw in the above reasoning, aside from the impracticality of the data gathering?)

As I recall, the reason this was even being talked about was because you said that the progressive tax did not have "transparency" and "easiness" of reasoning. I can see that this is not ideal. But the flat tax (of above bare survival income) isn't any better supported.

As for your argument against diminishing returns: I admit I wasn't thinking of investment and its influence on future income, just what the actual income at the time was. Although lower levels of income (above survival level) would also be able to invest, having more money to throw around can give one access to better investments. It comes to mind that the "money makes money" argument is actually one in favor of progressive taxes -- it's easier for high income individuals to make up the difference.

Still, at some point a person has more money than he would ever reasonably need for himself and his family. Do you disagree? If you don't, then there is a diminishing return for practical usefulness somewhere. I just think that it's a gradual trend instead of only applying to the superrich, but it's possible that I'm mistaken.