Forum Post: Fairness and the value of a dollar
Posted 13 years ago on Oct. 8, 2011, 9:40 p.m. EST by QuestionIStheAnswer
(3)
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If I have 100 dollars, but my friend has only 10 dollars, what is the value of a dollar to each of us? Because I have 100 dollars and my friend has 10 dollars, I am willing to spend 5 dollars on soap while my friend is only willing to spend 5 cents. Wouldn't this suggest that my dollar is worth 100x less than my friend's dollar? Let's use the idea of supply and demand to evaluate the value of a dollar for each individual when deciding how much to tax. Fairness dictates that our tax code be based on the value of a dollar for each individual, not a uniform percentage of income (i.e. flat tax)!
Interesting theory. But...my dollar buys the same product for the same price as the billionaire pays for it. So how is my dollar worth less?
Isn't that what a flat tax does? with a 10% tax, for example, you will pay 10 dollars while your friend will only pay 1 dollar.
I like the flat tax concept - how then can you regulate that sort of thing? Also, the tax code is, in practice, a debt bias code. You get to deduct interest off you mortgage yet pay taxes on interest earned in a savings account. In your example your buddy with the deeper opportunity to buy debt (credit card) is the person with the most advantage. It really only shows a price tolerance for soap - not the value of your buck.
The flat tax concept means (as you know, just stating to make sure we are on the same page) taking a certain percentage out of everyone's income. But what is a percentage? In math, it means: let income be x and some random number y (in this case a fraction) and tax amount be c c = y x This tax formula is completely arbitrary and used due to simplicity and its historical ubiquitousness. It suggests that tax should increase linearly with income. Since humans have been shown to inherently think in a logarithmic fashion, we should have the tax rate that is based on logs: Ln(c) = xLn(y) This time y is some constant, x is again income and c is the amount of tax
Sure. I want to know how do you accommodate someone who freelances with various gigs and say makes 15k one month and nothing for several months. Currently, the 15k is prorated as though she makes 15k EVERY month. I would much rather learn about a consumer based tax where spending is taxed rather a penalty for earning - or a hybrid idea - since this is an academic discussion and really nothing actionable.
Tottally agree. Increase taxes by percentage on the upper class. Decrease tax breaks for the wealthy. Stop making the richer richer. Bring back the capitalism that our founding fathers established when the federal income tax was a progressive tax , meaning that people with higher incomes pay a larger percentage of their incomes as taxes than do people with lower incomes.