The household that brings home $80K/yr would always spend a larger percentage of their income on taxable consumption, than an executive that takes home multiple million per year. Progressive income tax brackets are a better tool for making sure those who are able to pay a larger share of the common good, do so.

Unfortunately, we still have not come up with a realistic way to deal with the hoarding of wealth - both by individuals, as well as corporations like Apple with massive warchests. Even some more broadly accepted ideas like a LVT have some issues if the future really does trend towards "AI" displacing people from their jobs.

One way or another, the reality is that the tools we have right now have persisted because they do their job well when politicians act in good faith and don't implement poor fiscal policy emphasizing short-term gains that result in long-term pain. But, they're still fundamentally flawed, and something is going to have to change if we do see dramatic changes to society in the coming decade due to developing technologies.

"Progressive income tax brackets" don't actually do this. The people with so much money they can't spend it all use various tax shelters as it is. They typically manage to not even pay tax on the amounts they do spend, because they borrow money and spend it instead of recognizing it as income first. So they would be paying more under a flat consumption tax than they do under the status quo. The "progressive income tax system" doesn't actually work the way it's claimed to.

On top of that, the problem is essentially fake. People absolutely can and do spend millions of dollars a year. Cardiologists making seven figures buy huge houses with multi-car garages full of exotic makes etc. It's spending billions of dollars a year that nobody is really going to do, but that's such a tiny percentage of people that it's ridiculous to design a tax system being imposed on everybody else on the basis of that, and those are the exact people who aren't paying the high rates under the existing system anyway.

Here's a proposal: Have a flat consumption tax, and then have an income tax where the rate is 0% up to the 99.9th percentile income and only the top 0.1% even have to file a tax return. The latter is going to be avoided in the same ways it is now, but at least then you can't say the billionaires don't have a higher nominal rate, right?

How do you take a retiree couple whose main income-earning days are far behind them, and ask them to pay 25% or more on their consumption?

Not an impossible problem, but it’s THE problem.

Also, aren't people with an enormous amount of stored wealth "the rich"?

But also, government pensions tend to be, shall we say, unreasonably generous, because they live in that sour spot between "the legislature doesn't have to pay for this in the current year's budget" and "the union negotiates reasonable-seeming rules it knows it can game against public officials who are in their pocket or DGAF" e.g. pension is based on compensation in the last year before retirement and overtime is "awarded" based on seniority, so that people put in 80 hours of overtime every week in their last year. And then we're back to, aren't those the people we want to be taxing anyway?

That literature is playing fast & loose with terminology to justify a preexisting conclusion.

Anyhow, we know what life was like before Great Society programs, and it wasn't higher wages for the poor, we've just forgotten because it's been so successful. That memory hole oddly works in favor of both those who promote expanding welfare and those who oppose it.

> Walmart couldn’t pay $12/hr. if tax exemptions and SNAP and other aid didn’t fill the gap.

From a basic macro economic standpoint, most welfare programs push wages up by marginally reducing the labor pool. In a free market, how would Walmart be forced to pay a "livable wage" if entitlements didn't exist? Do you really think people would just choose not to work and starve if their wages didn't cover all their expenses? Out of spite? It doesn't make sense, and it certainly doesn't comport with history. It makes even less sense when people buy this argument yet also support minimum wage laws.

The counterexample is the Earned Income Tax Credit (EITC). EITC increases as your wages increase, theoretically incentivizing work, rather than diminishing as you earn more. This would increase labor supply. What tends to happen to prices (i.e. wages--price of labor) when supply increases but not demand? Presumably the more cogent literature bemoaning Walmart's labor practices is primarily relying on EITC while hoping the reader glosses over the distinction.

That doesn't tell you the answer because the programs were instituted prior to the productivity increases in the 20th century. Are people better off now than they were before the general availability of electric light or mechanized transportation? Probably, but that doesn't mean you can trace the development of modern agriculture to the existence of SNAP.

> In a free market, how would Walmart be forced to pay a "livable wage" if entitlements didn't exist?

People frequently have choices between jobs that are easier or otherwise more pleasant and jobs that pay more. For example, long-haul truck drivers get paid significantly more than short-haul drivers, but they also sleep in their trucks and don't get to see their families most nights. Likewise, a lot of jobs require you to get a degree or certification, which can be a lot of work, which people may not be willing to do if they don't need to.

If you give them "benefits" then they take the easier job over the better paying one. Which allows the employer offering the easier job to pay less and still get applicants. It also creates a poverty trap if the benefits are contingent on not making more money, because then the compensation advantage of the higher-paying job is much smaller -- in some cases negative.

> EITC increases as your wages increase, theoretically incentivizing work, rather than diminishing as you earn more.

Except that it does diminish as you earn more, because it has an aggressive phase out. For a single person with no dependents, the phase out kicks in below federal minimum wage. If you had a minimum wage job at 30 hours a week and wanted to work 40 hours, increasing your hours would cause you to receive a smaller EITC.

There is a reason the EITC represents ~0.1% of the federal budget, and it's not because it's a bad idea, it's because it's implemented in a way that prevents people from getting much from it.

That's a slight of hand. There's value in choice, and that value is being reaped by the worker precisely because poverty programs make it possible.

But let's go with that example. You're assuming the number of truckers and trucker-hours would remain constant. But they wouldn't. That's just not how dynamic systems work. There are other people for whom short-haul trucking is the less desirable choice than what they're doing now, or who work fewer hours than they're doing now. Without the welfare subsidies, the supply of short-haul trucking labor would likely increase--more people working more hours. Similarly, you're assuming the demand for short-haul trucking would remain the same at higher wages. But demand in economics is not the same thing as "I would like" or even "I need", and at higher wages the demand would likely diminish.

The whole argument is the economics equivalent of a perpetual motion machine, and it's sold by throwing contrived complexity at people and hoping they don't think it through. Like perpetual motion or free energy machines, at the most miniscule scale there are exceptions and caveats (maybe short-haul wages in particular would rise, especially after accounting for the totality of labor economy changes), but those exceptions don't scale to a systems level. That doesn't stop con artists from selling their Rube Goldberg machines, though, knowing the vast majority of people won't think it through.

What the rhetoric is trying to do is bolster support for a livable wage through radical policy changes by drumming up anti-corporate sentiment. It's in service of a normative argument (a "livable wage" is a reasonable social ask, IMO, notwithstanding its amorphous nature), but disguised as a scientific argument that can only result in failure by setting wrong expectations about how markets and policy operate, ultimately reinforcing cynicism.

It seems like you're ignoring the same thing you're objecting to: It's a dynamic system.

If long-haul trucking companies offer less desirable but higher paying jobs and easier jobs aren't paying a living wage then people would pick the harder job that lets them not starve. Which means the easier jobs would have to pay more in order to attract workers, unless those workers can get government assistance. If they can, the easier jobs can get people to work without paying more, because the assistance programs let them pick the easier job even at lower pay. In other words, the subsidies were supposed to go to the poor and instead they went to the lower-paying employers.

In a dynamic system the long-haul companies would then have to respond if it became more desirable to work somewhere the pay is low enough to get government assistance, but the phase outs give the low-paying employers another advantage.

Say the undesirability of the job is good for $15k/year in additional compensation. However, if you got paid $15k more, you'd lose $10k to government benefit phase outs and additional taxes. To actually get paid $15k more, you'd have to "get paid" $45k more. Which is to say, the employer with the low-paying job can pay you $45k less.

But it's a dynamic system, so they might "only" pay you $35k less and then hire more people. The trucking companies would then have to pay $45k more than them when it used to be $15k. Even with Walmart paying less than before, their relative advantage has increased. And there are two ways to get something a long distance over land: A long-haul truck the whole way, or a short-haul truck to the rail yard, a freight train, and then another short-haul truck. So then instead of a truck driver getting higher pay per mile over 2000 miles of driving, a different one gets lower pay per mile over 60 miles of driving twice, and a rail company gets the rest.

So the low-wage subsidies cause the amount of higher-wage labor demand to go down by making it less competitive with non-labor alternatives to perform the same function, as labor is diverted to the lower-paying jobs even while enabling them to pay even less.

> There are other people for whom short-haul trucking is the less desirable choice than what they're doing now, or who work fewer hours than they're doing now.

All of that is already baked in to the existing numbers; the long-haul drivers get paid more because fewer people want to do it.

> Like perpetual motion or free energy machines, at the most miniscule scale there are exceptions and caveats, but those exceptions don't scale to a systems level.

Only they're not exceptions. If you subsidize something you get more of it. What happens if you subsidize low-paying jobs but not higher-paying jobs?

I honestly don’t understand taxing anyone making less than something like 500K.

Don’t tax anyone earns less than this, focus all tax collection to top 1% and all big corps that makes more than 5M a year. With all those resource if this can be collected and obvious loopholes patched that’s it.

This would not only bring more tax, but also would fuel massive growth on the bottom line in terms startups and tons of innovation on the medium sized companies.

Most of the "we should just get all the taxes from rich people" arguments ignore two fairly important things.

The first is how asset markets works, i.e. why rich people are rich. It's because there are finitely many assets and whenever anyone rich gets more money, they use it to bid up the prices. But that makes high taxes on rich people do something unintuitive at scale: It takes away the money that was making the stock market go up. And then not only do they have less money, they also have less income, because the people who would have paid them for their stock also have less money, which makes stock prices go down. Which means that increasing their tax rate from e.g. 25% to 50% doesn't generate anywhere close to twice as much revenue, and it also lowers the growth rate in the tax revenue you get from them. Which means that raising the rate will, in the long term, inherently generate less revenue. Whether you end up underwater in 48 months or 48 years depends on what the existing and proposed rates are and what the economy looks like, but there is always some period of time after which a reduction in the compounding rate is going to absorb any percentage increase in the tax rate. At which point you're paying the recurring costs and lower compounding rate from the higher tax rate indefinitely in exchange for no additional revenue, and indeed for less government revenue.

And the second is that Congress wants money to spend, so they're going to do the things that cause them to have more money to spend. Now imagine what kind of non-tax policies they're going to implement if the tax system makes it so the only way they get more money to spend is if they transfer wealth from the poor to the rich. We don't actually have an effective solution to the principal-agent problem, so perverse incentives are bad, right?

If you do that in the USA, you're ignoring 79% of income. The top 1% earn a lot more than average but they're still small in number, and their collective income is only 21% of the total.

(And the USA is uncommonly high as regards income share received by the top 1%; Canada is at 11.5% and is fairly typical.)

There isn't really a silver bullet unless people in the US as a whole culturally become less consumerist and our entire economy is restructured around that fact.

Good. If they don't want to pay for the physical and legal infrastructure to make their business possible here, then they can go elsewhere. I'm so tired of this cowardly excuse.

In return for their super high taxes we should give them a 'contributor to society' chit or star or something. Then they can gamify over getting chits, instead of hundreds of billions more. I'll happily call Elon a '7 star citizen' and support such a game.

Don’t worry, the rich will keep working to fund our society. They don’t have any choice, they’re so obsessed with little pieces of paper.

If a top 1% individual is worth 1000x more than a bottom 50% individual, I would expect the numbers to be higher. If they are only worth 10x as much, it seems out of line and unfair to the higher payers.

Bottom 50% earners make on average 20-25k. Top 1% earners make on average 800k-1m.

So top 1% average income is 35 -45x higher than bottom 50%.

Bottom 50% earn 11-13% of total US income. Top 1% earners 20-22% of total US income.

I don’t have an opinion of fairness either way. I’m just sharing data.

I agree, but governments intentionally shifted from corporate taxes (taxes on net, corporate income) to payroll taxes (taxes proportional to employee wages) because businesses were either finding creatives ways of deferring/diverting income, or they just weren't taking profit (and, thus, nothing to tax).

See the third graph here (yellow line vs. dark blue line) https://taxpolicycenter.org/briefing-book/what-are-sources-r...