opinions-political-powerLawTaxation

the idea of tax brackets is fundamentally flawed, since to deal with the mega-rich we'd have to have most of the brackets be for various levels of mega-rich. in this case, since the percent paid by the mega-rich can be changed without affecting the taxes paid by the vast majority of people, the percent paid by the mega-rich would fluctute arbitrarily, driven not by concerns of maximizing social welfare or fairness, but rather by "politics" and class warfare.

i suggest instead a simple formula with only one free parameter:

  income_after_taxes = pretax_income^k

where k is the parameter which is set by law.

This formula is like having an infinite number of tax brackets; under this system, if Alice is richer than Bob, then Alice will pay a larger percent of her income to taxes than Bob does.

Given the distribution of income among the population, and a desired amount of tax revenue, k is determined. Therefore, this formula leaves no room for class warfare; all the government has to do is decide how much money it wants to raise, and then there is only one value of k that makes sense. Raising the amount of taxes collected would make everyone in the country pay more, unlike with tax brackets, where some people can be made to pay more without affecting others at all.

The prohibition of class warfare may be looked at as a disadvantage; a benevolent and intelligent dictator could, in theory, use a tax bracket to discriminate between classes in such a way so as to optimize social welfare, whereas the formula proposed makes an arbitrary decision on how much more richer people will be taxed compared to poorer. But in the real world, with tax brackets, the extra degree of control accorded by brackets is wasted, because the relative burden is determined not with an eye to maximizing social welfare, but by "politics".