With the flat tax of 15% that I mentioned, a person with $20mil/year salary would be paying $3 million a year back to society (not to mention the tax they would pay on the interest they made on any savings account and investments)
I would think that's a pretty big contribution to society.
What if we did 15% flat tax with a $30,000/year standard deduction...meaning your first $30k a year would be tax free, then anything you made over that you'd pay 15% on?
0-30,000 = Tax free for the year
50,000 = Pays 3,000 income tax
150,000 = Pays 18,000 income tax
1 million = Pays 145,500 income tax
etc...
all capital gains and interest gains taxes would still apply.
I would think that would be a very fair tax structure, would you agree?
I would not. The remaining income for those figures would be:
50,000 = Keeps 47,000
150,000 = Keeps 132,000
1,000,000 = Keeps 854,500
Etc
It's not a question of what percentage people pay, it's how much money is actually accumulated -
that's what pays for state funded things like schools, hospitals, roads, and the emergency services.
So the person who gets to keep over £800,000 literally has more they could give. An important issue is the value of money: the poorer you are, the more valuable your money is, and the richer you are, the more you can give back without it really affecting you.
That's why I prefer progressive tax. The rich man may well have worked hard for his money, and the poor person may well be exploiting the benefits system, but the fact remains that the former has more to give, and is less imposed by tax.
Even in your own tax scenario, the 'flat' tax is actually progressive, as it's null for 0-30,000, and 15% for 30,001+.
The progressive tax structure has some overlaps in it where you could potentially get a raise, but actually take home less money depending on where you're at in your current bracket.
That's not how progressive tax works. When you move into a higher tax bracket, the higher tax rate is applied to money earned
above that limit.
For instance, say the brackets were:
0 - 10,000 = 0%
10,001 - 50,000 = 15%
50,001 - 150,000 = 40%
If I earned exactly 50,000, the first 10,000 is taxed at 0%, and the next 40,000 is taxed at 15%, so I pay a total of 6,000, so I take home 4,000.
If I get a rise of 1 and now earn 50,001, I'm now in the next tax bracket. So the first 10,000 is taxed at 0%, the next 40,000 at 15%, and the last 1 at 40%, meaning I pay 6,000.40, so I take home 44,000.60.
So I've moved into a new tax bracket, thus I pay tax at a higher rate, but still I take home more money that I did before the raise. When you move into a new tax bracket, you
entire income isn't taxed at the new rate, only the excess.