More on Taxes & Other Ways

One has to be careful in describing our taxes as 'progressive'. Our tax system is a complex combination of what I would describe as semi-progressive and outright regressive taxes. Take sales taxes (regressive), gas taxes (regressive), payroll taxes (flat to regressive) and property taxes (depends on state/locale but generally are regressive or 'humped' in the middle in terms of proportion of income spent).

Only the income tax is 'progressive' and even then it depends on your situation. For example, if you make income in working wages you can be taxed at a higher rate than someone who makes the same income in interest or dividends and substantially higher than someone who makes the same income from bagging some capital gains. If you're a savvy real estate investor you can realize literally millions in cash income without paying a penny in income taxes.

So within types of income the income tax is 'progressive' but somewhere along the line we made a political decision to tax work at a higher rate than income by any other means -- simply by cutting taxes on non-work income.

Of course, I once had an economics teacher who argued that all taxes were regressive, whatever the rate. Why? Impact. Because if you tax someone 38% who's making $400,000 he isn't making any hard choices - maybe he buys the BMW instead of the Mercedes. But you're not taking any food off the table. But you put a 7% tax on someone making minimum wage, good chance you're taking food off the table.

If it were up to me, perfect world, we'd start over, obliterate all the various regressive taxes and start from scratch with either a genuinely pure progressive tax scale, or just can the ideology on both sides and go to a straight across-the-board Value-Added Tax (VAT) in place of it all to depersonalize the tax thing once and for all.

In a progressive income tax scenario, I would also eliminate corporate taxes, for 3 reasons: (1) taxing corporations essentially gives them a stake and a voice and makes them too much leverage - I'd couple it with an amendment to the constitution to reverse the infamous Citizens United ruling (2) it's really just a bad substitute for a properly progressive personal tax structure: in the end, humans pay all taxes anyway, and (3) the big corporations have figured out how to avoid it anyway through offshoring and other tricks, so the tax ends up falling harder on smaller-to-medium businesses and so is regressive.