Sometimes I have my students get in groups and discuss what should be done about income inequality. The other day one of the groups thought it wrong that policemen and teachers make so little money, and athletes so much.
Clearly, it would be wrong to regulate what an industry can pay people, and inefficient as well. But, we could use tax policy to correct the obvious fact that a police officer is doing far more for society than Lebron James.
I am calling this new tax proposal the "Locke Are You Benefiting Society Tax Code". Here's how it would work. Your tax rate would be determined by how you make your money. If you are performing a vital service to society, such as teaching, cop, serving in the military, you pay 0% income tax. As your benefit to society goes down, your tax rate goes up. Manufacture something, you pay a reasonable rate, depending on what you are making. Create a new product or service that makes our lives better, pay a low tax. However, if you are making your money scamming people, making us dumber, or selling us stuff no one should need, you are gonna be taxed bigtime! And if you are on TV just plain lying to people every night, like Glenn Beck, you can expect a 99% tax rate. Sit on your ass and collect checks from your trust fund, pay a high tax.
So, your local fireman pays no tax, as does your kids teacher. Economics, Science and Math professors pay no tax, while Women's Studies professors pay about 75%. Lawyers who defend the poor and oppressed, low tax rate. Lawyers who scare up complaints for class action suits where the lawyer is the only one who makes money, 99%. Lawyers who defend polluters, 99%, same as the polluters. Entertainers and athletes would pay a fairly high rate, depending on the quality of the entertainment they provide (Paris Hilton and the Buffalo Bills would be in a very high tax rate!).
And by what system, you might ask, would it be decided who pays what rate? Easy, it would be determined by me, your Tax Czar, a job that is vital to society and therefore has a 0% tax rate.
If there is a flaw in this idea, I certainly can't see it!
4 comments:
Not sure how to respond....where would I fall, as a full time student/working bartender (hence, providing your distraction/addiction/vice...whatever). I think I get bonus points!
and, lest I forget, enabling your employment. Good post, Glen!
So I would assume heart surgeons and members of the E Street Band would be taxed at a very low rate? You can expect applications for both jobs to go skyrocketing in the months ahead.
And aren't you the same guy who wanted to turn beer cans into currency? With a Molson can worth much more than Simon Pure?
As a guest teacher here in South Korea I pay no income tax. If I decide to stay more than two years then I would have to pay income tax which I believe is around 2% - the max anyone pays is 17%. Here is the kicker - you do not file a tax return, your employer does it for you and there are no refunds except in extraordinary circumstances. The system is incredibly efficient. Also there is no sales tax so the price of the item on the shelf is the price you pay at the checkout. My health insurance premium is $50 a month and I pay $99 into retirement which is fully refundable when I leave the country. I'm still trying to figure out how the government pays for everything. Just remember we have the 10th largest economy in the world and pretty much escaped the recession.
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