Tax Rate for the Rich

Income tax brackets for the USA in general: this tells us little, because the super-rich do not pay the 37%. [1]

Who pays? Not these guys:

The top wealth Americans pay betweeon 0.1% and 3% tax rate on income. Their growth in wealth is 10x of their income. [2]

Why do average americans support lower taxes for the rich? Because they think the rich deserve it [3]: 'we find strong support for fairness-based explanations'. Fairness-based explanations are this [4].

But 61% of the people think the rich don't pay a fair share. [5].

Key Points

• Tax system has transitioned from an income tax system to a wage tax system through the 'buy-borrow-die' scheme. [6]
• Thus, as suggested above, Income Tax Brackets mean little due to loopholes at the top.

Notes

• COVID transfered $1.2T to the wealthy [7]
• The “step-up in basis” is widely recognized by experts across the political spectrum as a flaw in the code.
• Proposal by Edward McCaffery - A progressive spending tax is a practical, well supported idea that I have explored at great lengthelsewhere.
• Reagan slashed tax shelters, meant to hide income tax, but retained the 'buy borrow die' that was available to the wealthy all the time. p29
• when Warren Buffett revealed that he had just under $40 million ($40,000,000) in taxable income for the calendar year 2010,108 he did not reveal, and his tax forms did not have to reveal, that he also had over $8 billion ($8,000,000,000) in unrealized appreciation that year from his shares of Berkshire-Hathaway stock alone.109 This basic analytic fact, true for over a century, helps to provide one of the optical illusions hiding the rather flat universal wage tax.
• fatal problem with Democratic or liberal tax policy in the post War era: because taxes fall primarily on wages, redistribution, if any, has to occur from more highly paid to lower paid workers or the non-working poor. The middle class is pitted against the lower class while the upper class sits on the sidelines. This is not a recipe for social stability. p8 [file:///home/marcin/Desktop/ssrn-3242314%20(1).pdf]
• NB - capital in the form of autonomous productive systems at the community scale can leapfrog the wage tax pickle
• Corporate tax is only 10%, majority is payroll and income. p13. [file:///home/marcin/Desktop/ssrn-3242314%20(1).pdf]

Deriving Solutions

• First, is there a problem? Some say yes, some say no. The top 1% pay 25% of all income tax. [8]. Top 1% own 30% of wealth. So the taxation amount seems to be fair? However, the super-rich pay much lower rates. Now the top 0.1% owns $20T, or about 14% of all wealth (and of course the skew is higher the richer we go)
• Flat rate across the board could be fair. Devil's in the details. So we can start with a ridiculous low rate such as 10%, or lowest bracket in the US system. This way, the US tax system is perfectly fair - but only up to $11k. People say a 'flat rate is regressive'. [9] Not if we start the bottom bracket at the minimum level - or even no taxes up to a certain level - and continue the 10% to higher brackets up to huge incomes - but without loopholes and writeoffs. You simply pay tax on your net.