Taxes Thought Experiment

Three questions:

Scenario 1) Imagine you’re given a special privilege—paying taxes is voluntary. You can pay as little or as much as you’d like, and no one else has this special privilege—they are all legally required to pay their taxes just like they are now. What percentage of your income would you decide to pay?

Scenario 2) You’re given the same privilege as in Scenario 1, except now, it’s a nationwide privilege. Every citizen gets to decide for themselves what portion of their income to pay (assume everyone would have to decide individually without any knowledge of what anyone else was paying, and each person’s decision would forever be kept a secret). What percentage of your income would you pay?

Scenario 3) You have the privilege of choosing what percentage of your income to pay in taxes, but now, whatever you choose, everyone else will have to pay that same exact percentage of their own income. What percentage would you pay?

Are your three answers the same? Different? If different, what are the reasons?

___________

Two notes:

1) Things are progressing.

2) There will be no Dinner Table next week.

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  • Jason Diolatzis

    Not sure about the first two. But for the third scenario I would choose something like 70%.
    If people making billions would be taxed at 70% we would have the best education possible, best healthcare possible, public transportation would probably be free, lots of money for research at unis etc.
    For the lower income that 70% would be impossible, you could probably provide at least free housing for them, house development has always been a huge sector to keep the economy expanding.

    • Carl

      Apparently you base your response on the farcical notion the money would be used for these endeavors. The government takes in PLENTY of money- MUCH more than needed. The problem is
      the levels of bureaucracy, the incompetence of the government and the inherent
      waste built into the budget building process. The individual in the government hasn’t a care in the world when it comes to being frugal or cost conscience. It isn’t their money and so they have no motivation or incentive to spend it wisely. In fact, they are punished if they spend less than they are given.

      We already spend more per student than most (if not all) other countries and we still have an abysmal track record when compared to the others. Why? Because we throw money away on
      wasteful spending and projects to fatten to the pockets and coffers of the bureaucrats who run the system. The teachers aren’t paid much as the bloated levels of administrators suck more and more money out of the flow of money taken from the taxpayer “to help the children.”

      This is the reality of the USA- we are taxed MORE than enough, but the money is pissed away by irresponsible, uncaring, incapable and apathetic spenders. The government takes MORE than enough, it just isn’t held accountable for spending it as frugally as we taxpayers spend our own money.

      • Jason Diolatzis

        The issue with the education in the U.S. specifically is not about the money spent as you said but with the approach that has been taken. A few hours of research on Finland’s educational system vs the U.S. educational system makes it very clear. Nonetheless, good education requires funding and I find it hard to believe there can be such a thing as over-spending for education.

        Although to a certain extend the notion the money would be used for these endeavours is farcical, that level differs quite a bit depending on the government.
        I too get the impression that the U.S. government is not at all independent and an increase in tax income may go into the military or the privatisation of the jailing system rather that education or healthcare simply because the private sector in these areas is bigger than the sector in the healthcare, it may not be the case with the government of Denmark or Finland. At least not to the same extent.

        Something tells me that the less independent a government is the more it is filled with irresponsible, uncaring, incapable and apathetic bureaucrats and the more ties it has with the elite that would be able to grab all that tax money through various ways.
        I have met just a couple of people from Finland and Denmark personally, and none of them described their public servants with these words 😉
        Not that a couple of people and people that I specifically met is a good sample, but that’s all I have to go by.

  • Einer

    Scenario 2- Would everyone else know the amount chosen by me? Because that is changing everything.

  • Joel Farrugia

    What if the amount of taxes you pay, determines the amount of votes you get during government elections or equivalent. So if you pay no taxes, you do not get to vote then you have to pay a certain amount of taxes to get the corresponding number of votes. The idea is the ability to influence the direction the country takes is determined by the contributions you make to the country.

    • RF42

      What a nightmare scenario. Do we really want the Koch brothers or Donald Trump making our laws? Because they’d vote in politicians that held their moral and political viewpoints regardless if the other 90% of US citizens held opposite beliefs and opinions. Truth be told, we are actually already headed in this direction with Citizens United and our lack of regulation on political contributions and lobbying, without the benefit of these heavy contributors paying their fare share of taxes given the way they take advantage of all of the loopholes they are afforded. The whole point of democracy is that all viewpoints are considered equal regardless of social or economic status. And we all know what happens when the oppressed have had enough of being oppressed (see: French Revolution). Try imagining what could happen when the poor and unrepresented finally have had enough given the fact that we allow everyone to own pretty much any type of firearm they’d like.

      • Blrp

        They already do. I don’t have a link on me, but I remember reading that the probability of a law being passed has no correlation with the amount of people who want it, but has pretty much 100% correlation with the amount of people in the 1% who want it. Still a shitty suggestion though.

        • RF42

          Exactly – we already have this system unofficially because laws are made by bought politicians. It’s infuriating and certainly goes against everything that the Founding Fathers intended for our country. And we are in this viscous cycle because even though the vast majority of us want it changed, we aren’t the one capable of buying the politicians. The suggestion that this “system” become legit by tying votes to a taxes-paid system is horrifying. At least then we’d be admitting how corrupt our government has become.

      • Carl

        “Because they’d vote in politicians that held their moral and political viewpoints regardless if the other 90% of US citizens held opposite beliefs and opinions”

        And you don’t think this is happening now? The individual in office is of trivial concern. They all can, and are, bought with contributions, kickbacks and bribes. To think this country is run “by, of and for the People” is folly at best.

        • RF42

          I do think that’s what’s happening now. That’s why I said, “Truth be told, we are actually already headed in this direction…”

      • Joel Farrugia

        I do not think its as clear-cut. Firstly, Koch brothers and Donald Trump might (and probably do) have different goals so they will not necessarily team up with each other to ‘destroy’ the rest of the populace. The other thing to keep in mind is that there are so many Donald Trumps so the amount of taxes they can pay to acquire votes might not necessarily be enough to offset the taxes the general public can pay and therefore their number of votes. Also it is not a suggestion but a thought experiment.

    • Adam

      A country should do what’s best for its people; a vote should not be a reward for working hard, but merely a way to ascertain the best way forward. The majority are not always right but I’d say they’re a lot more balanced than a few people who happen to have inherited wealth. If income truly were an accurate measure of utility of your contributions to the world, I’d give your idea some thought, but I don’t believe it is.

      Take footballers, or other high-paid sportspersons, for example. Their contributions to the world are certainly positive, and football is a huge hobby and source of entertainment for many, many people that I wouldn’t want to deprive anyone of. But that doesn’t mean a footballer should get more votes than anyone else. Their athletic ability does not somehow increase their ability to decide what’s best for their country by such an incredibly large factor that we must give them ridiculously large numbers of votes because their wages are so high.

    • Nils Åkesson

      Extremely dangerous p.o.v. but then again, this is in sorts the reality in the U.S. where the presidential votes more or less are bought through costly campaigns, sponsored by wealthy people, disgusting.

  • iad bungler

    For the first too, I’d pay the same, because it’s only a drop in the bucket, and increasing or decreasing what I pay would not really matter, and I’d feel shameful to pay less (as if I’d be stealing from other people).
    For the third one, I’d go along with Jason below and suggest a high percentage, and provide a lot more social services; but this can only work if all types of income are considered equal, which isn’t the case nowadays (e.g. dividends & long term capital gain from stocks are taxed less).
    If I had to choose, I’d rather everyone paying a % of their income based on that income amount, but paying “exponentially” more as the income increase.

  • RF42

    This is really tough. For #1, I think I’d probably pay slightly less than we do now. We are in that unfortunate situation of being at the bottom of the income range for our bracket, so it seems like we pay out a heck of a lot relative to what we make. It’s never painless, always very painful, to pay our taxes. As for #2, I can totally see why a lot of people – maybe me included – would assume that EVERYONE is choosing to pay nothing so why should I have to pay anything? It would be a moral victory to keep paying what we pay now in that case. As far as #3, I’m a firm believer in the scaled tax system so I don’t know what I’d choose percentage wise.

  • Jason

    1) I’d pay zero. Doesn’t affect anything.

    2) Interestingly, I’d pay something here even though my choice still doesn’t affect anything. But it feels like it does. If I were being logical I’d still pay nothing, but because if everyone made that decisions we’d be screwed, it feels like paying something means it’s more likely that everyone pays something. Even though it doesn’t.

    3) I’d probably pay about 25%. Now it does affect things, so I’d think about what I think is best for the country.

    • Vladimir

      1) I’d pay zero. Doesn’t affect anything.

      This is interesting point to me. What if everybody thinks like this?

      • David

        The answer to your question is Scenario #2.

  • Daniel

    Am I paying US taxes?
    Do I live in the present?
    Do I know how government spending would change in 3)?

  • Luckyus

    Heven’t needed a good Think in a while. “Voluntary Taxes” I set the rate? Gee, what am I paying now, he says? Well the state gets me for 5.5% on dam near anything i buy. There are imbedded taxes in a great deal of stuff I use and buy. I am retired now, and they don’t take taxes (Fed or state) out of my social security, or my small pension. I have a decent amount invested in fax free or, tax deferred investments so no need to worry about those until age 70. 2014 effective tax rates were 14.4% and 4.1% to the state after claiming all available deductions, plus sales, use and imbedded taxes.

    I will assume there are NO other STATE or FEDERAL sales, use, special, property, license fees etc.
    So, here goes:

    scenario 1 Zero % no guilty feeling here. (some do it now)
    scenario 2 35% remember it covers EVERYTHING!!!
    scenario 3 35% REMEMBER – it covers EVERYTHING!!! no ‘NEW’ Taxes

    Since I am not a high earner retiree, I fear an all inclusive tax rate may be too low showing the idiocy of a flat tax, but that is my biased prejudice showing. I live in a high tax high service state.

  • Chris-Anna

    “Suppose that every day 10 men go to a restaurant for dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59.”

    The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” Now dinner for the 10 only costs $80. The first four are unaffected. They still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody’s share, then the fifth man and the sixth man would end up being paid to eat their meal.

    The restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same percentage, being sure to give each a break, and he proceeded to work out the amounts each should pay. And so now the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59.

    Outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” complained the sixth man, pointing to the tenth, “and he got $7!”

    “Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got seven times more than me!”

    “That’s true,” shouted the seventh man. “Why should he get $7 back when I got only $2? The wealthy get all the breaks!”

    “Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor.”

    Then, the nine men surrounded the tenth man (the richest one, paying the most) and beat him up. The next night the richest man didn’t show up for dinner, so now the nine men sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short!

    “And that, boys, girls and college instructors, is how America’s tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more. There are lots of good restaurants in Switzerland and the Caribbean.”

    • Nice tale, but wrong. The richest guy in america pays almost the lowest taxes (as Warren Buffet emphasis every now and again). So you’re story is missing the point.

      • Patrick

        However, that’s the case in Denmark. And many successful and wealthy people leave the country. And people hate them for it. So for the Danish progressive tax system the story is pretty spot on.
        It’s a political hot potato at every election, and since the story can be perceived as half full / half empty there is plenty of fuel for the opposing parties.

      • Eli Peter

        To add to this, it also doesn’t highlight just how exponentially different the income tiers are (as pointed out in Tim’s piece (https://waitbutwhy.com/2014/03/combined-wealth-world.html). For example, there are people walking the US with more *inherited* wealth than the combined wealth of millions of people.

        Imagine a crowd of people large enough to fill out the city of Chicago four or five times over (or for that matter Wrigley field 250 times over). Any one of the Walton heirs might have more wealth than that entire crowd. Pretty mind-boggling.

    • tommo_montana

      Your story is wrong, because you missed the most important part!

      The richest man eats 8 meals. (top 10% own 80% of wealth)
      The next man eats ~1.2 meals. (2nd 10% own 12% of the wealth)
      The last 8 share .7 meals between them and, naturally, starve.

      This is in stark contrast to your idiotic words, “The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement.”

      • penguin

        lets resort to name calling. Nice job. Your supposition is that wealth is consuming – when it is the exact opposite, its from producing. Money is an IOU for something that has been produced, we trade these IOU’s in order to get good’s and services from other people. I believe you are citing the book “Envy Economics, cuz DATS Not FAIR “. Your other mistake is assuming that somehow the rich man is receiving a greater benefit from paying more taxes to the federal government – which he most likely is not. You believe in an economic fallacy called fixed-pie. I can quite easily replace your ‘eats’, with ‘produced’ and that would be a far more accurate statement.

        • tommo_montana

          Where did I resort to name calling? I didn’t.

          Why do you suppose that i suppose wealth = consumption? I don’t.

          Why do you assume I believe in fixed-pie? I don’t.

          Money isn’t an IOU for things produced. Money is traded for all kinds of reasons, some of which are goods and services, many are bads and disservices. Insurance can be purchased with money, and it is neither a good nor a service. It’s a tax on being poor (wealthy people entities can effectively self-insure, and avoid paying premia). Money can also be used to speculate (non-productive). Currency was originally a tool for trade. Money is also a tool for power and control. Nothing was produced against the $1.2T pile of student loan debt for example. That money is an IOU for students to the government, but it DOES NOT represent that the government produced $1.2T in wealth. None of that money can be traded for goods and services. (Yes, it’s goods, not good’s. That error announces to the world you’re not good at learning.)

          You’ve got it backward. You say that I’m assuming the rich man is receiving a greater benefit from paying more taxes. The reality is the rich have already received tremendous benefits – wealth, political and economic security. Taxes are owed as a result of receiving these enormous benefits from society. Also, the rich pay less taxes. Many businesses pay $0 or negative tax rates. Capital gains are taxed less than middle-class income, and capital gains are the fruit of ownership, vs middle-class income, which is the fruit of labor. Even in the shitty, contrived story, the one guy receiving 80% of the economic wealth was paying just 52% of the restaurant bill!

          Also, you MAY NOT replace “eats” with “produces”, because the living Waltons haven’t produced jack shit, and they enjoy enormous wealth. Steve Jobs’ widow has produced nothing for anyone. Yet she is a billionaire. Warren Buffet is really good at noticing mis-priced securities, but he has had the tremendous benefit of rich friends for over half a century. Warren Buffet didn’t produce the companies he’s bought and owned. Warren Buffet didn’t produce his rich friends (though he did multiply their existing wealth!) I’m not envious, but it certainly isn’t fair. I don’t know why you’re pointing that out though, because you’re not a billionaire, so if you were a rational person, you’d want corporations and wealthy individuals to pay AT LEAST the same rate of tax that we middle and lower class citizens do. Yet your rhetoric is the kind that allows billionaires to flaunt responsibility and pay far less than their fair share of taxes. I’ll bet you your annual income that Warren Buffet, the Waltons, and Widow Jobs receive greater benefit from American government than you, and also that they pay less $tax/$benefit than you. I pay $0 income tax, but I don’t benefit from our government the way billionaires do.

          In order to claim that ‘eats’ can be replaced with ‘produces’, you have to certify and sign the following statement:
          “I, Penguin, do solemnly swear that 4 Waltons have PRODUCED more goods and services for America than the 134 million poorest Americans combined.”

          If you actually believe that, you’re fucking retarded. But you HAVE to believe that to believe that you can just switch ‘eats’ with ‘produces’ (not ‘produced’, as you wrote, because we need the verb tenses to agree, dumbass.)

          All of these billionaires can pay taxes, which provide roads (how the WalMart fleet moves products), welfare (how WalMart employees are able to survive), medicaid/medicare (how employees at all these enterprises are able to continue living and producing for their corporate masters), and military — because individual citizens don’t benefit all that much from our multi-trillion-dollar military imperialism.

          You’ve straw-manned me many times. I am none of the things you state, and I reject your argument that you can replace eats with produced. Your move.

          • penguin

            my move ? Youre playing checkers and I’m playing chess. You can’t even comprehend the meaning of your own ramblings. I appreciate the above pasted MSNBC bullet points, though.

            I can tell you believe in fixed pie economics because of the implication of your previous statement.

            The richest man eats 8 meals. (top 10% own 80% of wealth) ” This implies that you believe that there is only a certain amount of wealth – hence fixed pie fallacy. Whether you know that you believe it or not doesn’t change the fact that you argue with that fallacy. Which is why so many of your conclusions are moronic to people who understand basic econ.

            The reason why a few Americans are worth so much more than other Americans is because a huge portion of the country is in debt. If you have 35% of the country worth negative dollars because they have more liabilities than assets – the first person that is worth a net positive 1$ will be worth more than the 35% portion of the country in debt. The Waltons have a majority stake in a company that produces and distributes millions of goods daily that a lot of people use. If that means that their equity is worth more than x% of the population, then so be it. The reason it bothers you so much is because, again, you believe in a fixed economic pie, where if one person has something, it means another has less.

            Insurance is only a disservice when the government mandates that everyone have insurance – or that companies provide insurance to their employees. This creates an insurance industrial complex where insurance companies push for laws to keep them afloat. This can raise prices on things like healthcare. Insurance without Uncle Sam’s intrusion is actually a really good thing. It keeps a lot of people afloat when things go bad and serves an important market function for disasters and what not.

            Money is an IOU (especially in fiat currency) but i would have to point you to the french economist Frederick Bastiat for more on that. You should keep a cooler head. I can tell you are heavily affected by these things because you think with your emotions. Try reading adam smith or something. Chill and figure out why things are really the way they are instead of spouting off the talking points.

            • tommo_montana

              The top 10% do own 80% of the wealth. That is a fact, and in no way belies an opinion for fixed or growth mindset. I have a growth mindset. Next year, the wealth and abundance will be greater than this year. For example, nobody could even buy a Tesla 50 years ago, regardless of how many billions of dollars they had.

              I’ve probably done more reading and studies in economics than you. How many Adam Smith titles have you read? I’m reading Supermoney right now. I won 1st place (and a $100 savings bond) in my state in the federal reserve’s economics challenge, and went on to represent at the national competition.

              I’ve hung out with libertarians before, and I’m familiar with the bullshit you’re spouting. Yes, fiat currency is debt, but you said, and I repeat, “money is an IOU for goods produced”. That is what I contended with, you can’t go back. I’m not bothered. Stop pretending that I’m emotional and you’re all cold and rational.

              None of what I’ve written is a talking point. I’ve composed 100% of it. Pretending like you are smart or “actually figured why things are the way they are” because you can reference Frederick Bastiat is ridiculous.

              You wrote that I conflated consumption with wealth. I didn’t. That was in the metaphor of the story. In the story, the meal that the men “enjoyed” is analogous to wealth, and the bill is analogous to taxes.

              You, however, are conflating wealth and production.

              You didn’t certify the statement that the 4 people produced more goods and services than the 137,500,000 people.

              That means you accept that those 4 people, who enjoy greater wealth than 137,500,0000 people didn’t actually produce more than them, which means we can also say that wealth doesn’t correlate with production. That’s another libertarian fantasy.

              And you didn’t even respond to the points I made about how these billionaires arrived at their wealth. Many inherited it, and even Warren B benefited from wealthy friends early in life.

              These realities fly in the face of libertarian thinking. Because how can you brush off Widow Jobs and Walton billions? They produced nothing. They inherited ownership, and continued owning. Owning isn’t production. You can believe in a growing pie, as I also do, but what I believe, based on observations and evidence, and what you don’t believe, is that the gross inequality in the distribution of wealth is harmful to the rate of the growth of the pie!

            • penguin

              Nope.

              the metaphor of the story represented the amount of goods and services each individual got back from the government given the amount of taxes they paid –Not how much they ‘were given in wealth’. How did you not understand this??????? That is really embarrassing for you.

              I was unaware that you didn’t even understand the basic premise of the story. This is why you can’t argue with butt-hurt internet dunces. Stay fresh buddy.

            • tommo_montana

              I disagree.

              The biggest benefits bestowed by government are the legal system, police, political system, etc that allow people to attain, and far more importantly, maintain, wealth.

              I would only claim that 1/3 of billionaires are “given” their wealth. But I am claiming that whether earned or given, wealth should pay its fair share of taxes. The responsibility to pay tax stems from wealth, which is the ownership of land, resources, goods, and services in America.

              Even if we go with your interpretation, that the meal was the gov’t spending (essentially just military, medicaid, medicare, and soc sec), the biggest welfare recipient in the US is Walmart. The Waltons pay their workers peanuts, pay very little taxes, avoided multi-billion-dollar estate taxes, and continue to enjoy over $100 billion of inherited wealth.

              I feel like you’re missing something if you think that it’s something other than our perverse system of government that bestowed the Walton babies with all that wealth. Do you claim the Walton babies produced their wealth?

            • tommo_montana

              Would you please state your beliefs on the Gini coefficient vs rate of economic development? You didn’t address that.

    • Kathryn Warner

      I believe there is a disconnect here, people don’t complain about the dollar amount that the wealthy have their taxes reduced so much as the percentage, which here was reduced equally across the board.

      Also, they should only be $42 short rather than $52 unless the wealthy person ate nothing every night.

  • Carl

    1) I would pay nothing until the government demonstrates it would be as frugal with my money as I am with it.

    2) I would still pay nothing until the government demonstrated it was as frugal as I am. This may lead to a government collapse. So be it. Governments come and go and are usually replaced with better, more people focused governments. We could use a good house cleaning.

    3) I would pick zero percent until this current government collapsed OR until it presented a budget and spend plan that would A) reduce the debt they have already enslaved us to and B) had an amendment that mandated a balanced budget with a tax rate not to exceed 15% across the board.

    My answers are the same in all three scenarios because I see first hand the waste, bloat, and incompetence the government possess with the handling of our hard earned tax money. They lie about this incompetence by crying about how they don’t have enough money and demand more taxes. They hide their irresponsible handling of our money by pointing our attention to the 1%, the illegal immigrants and Iraq/Afghanistan/ISIS, etc. as they reason behind our taxes going up and the quality of service going down. And America continues to be so stupid as to not see this happening and continuously voting in the same parasitic scum bags in every election.

    • Eli Peter

      Hey Carl,

      Just a couple of questions (not trying to jump on you or start an argument, just sincerely curious what your thoughts are).

      1. What country would you hold up as one demonstrating a responsible budget/taxation system (i.e. which country would we do well to emulate?
      2. What departments would you eliminate? Which ones would you cut down in size, and by how much?

      • Carl

        Hi, Eli- Apologies for the delayed response. I didn’t see your reply until just a few minutes ago.

        1) I honestly don’t know of any country I would hold up as a shining example of a responsible budget/taxation system. I am, however, able to present a few goals/ideas that would cause me to consider a tax/budget process to be worthy of my money.
        A) They would REWARD efficiency and savings instead of punishing it like we do in the USA.
        B) They would mandate a balanced budget every year and tie the salary of the lawmakers to this mandate. No balanced budget = no paycheck.
        C) They would have a process by which the will of the taxpayers is reflected in the budget. If nobody wants to pay for a new aircraft carrier or send money to Mexico or Borneo, then these things are not funded.

        There are others but these should suffice as starting points at least.

        2) I would eliminate the Department of Commerce. This is an archaic, unnecessary department that I can only conclude exists because it exists and not because it actually serves a purpose.

        I would reduce the Department of Education and push the responsibility of educating the next generation to the state level. This would push “competition” between the states which would, in theory anyway, lead to improvements in the educations being provided.

        I would eliminate Homeland Security and replace it with a “from the ground up” organization. The current DHS is comprised of various agencies that are forced to play with one another yet they are too focused on turf wars and carrying the banners of thier original agencies to do so. The DHS has internal departments that compete with each other, they do not have a unified data system to enable them to share intelligence, they lack a common language (e.g. acronyms) which highlights their differences and some of the internal offices cannot communicate with other internal offices because neither one will change their IT infrastructure to accommodate the other. In short, DHS is a playground run by politically focused morons instead of mission focused leaders.

        I would reduce the Treasury Department by at least 1/3. Besides printing money, what is their function? Counterfeiting is taken care of by the Secret Service and banking policy is controlled via fiat from the bank cartel.

        Department of Defense- I would slash the DoD by at least 35% AND hold the leadership accountable for every penny remaining. The theft, graft and bureaucratic bloat is beyond insanity and is allowed to continue because nobody has the guts to stand up to the DoD’s knee jerk “you hate the troops!” response whenever some level of fiscal sanity is requested of them. I honestly believe we could cut more than 35% of the DoD budget, use that money saved to FORCE them to employ greater efficiency and less redundancy and less bureaucracy to have an improved, possibly more effective, streamlined military. (I am prior service and am very well aware of the waste, fraud and abuse rampant in the services by both the feds and the contractors.)

        Department of Agriculture- I would cut by at LEAST 50%. As far as I can tell they are merely puppets for the Monsantos, Archer Daniels and Dow Chemicals out there. I see them doing little to protect our farmers, our agriculture or our food supplies.

        Department of Labor- I would reduce to their basic functions of ensuring a safe work environment, looking out for both the employers and employees, and assisting with those who are unable (not unwilling) to work.

        Department of Health and Human Services- I would reduce by 25% and use the savings to fund a DOJ effort to clean out the welfare rolls of violators and fraudulent activity. This money would also be used to prosecute the violators and try to introduce some level of “shame” with those who abuse the needy by committing Welfare and WIC fraud.

        I could go on but I am sure your eyes are glazing over by now.

        If I may- what are your thoughts on these cuts?

  • Gokhan Arslan

    0, 0, 60

  • Max

    If I’d live in a country like Denmark, Sweden, Norway or Finland I’d be pretty comfortable paying as much as anyone else in Scenario 1. And In Scenario 2 and 3 I’ll try to pay as much as I think is necessary maintain the welfare state.

    Why? Because in these countries corruption is almost nonexistent, they have great public education systems, great public healthcare and plenty of social assistance for the people who need it. Those are very valuable things that can only be maintained by the collective effort of a generous and emphatic society.

    • Betty M. McKinney

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      bc.

      http://www.Home-Job-ConceptsBest8/top7/yes...

      ⚛☤☤☤☤☤⚛⚛☤☤☤☤☤⚛⚛☤☤☤☤☤⚛⚛☤☤☤☤☤⚛⚛☤☤☤☤☤⚛⚛☤☤☤☤☤⚛

    • redpill2010

      Not to be critical, but you have to keep in mind those countries also tend to be more homogeneous and do not have to deal with the same spectrum of economic disparities that a large country with lots of immigrants deals with. But to that point, it is evidence that collective human structures (everything from the family unit up to sovereign governments) tend to work better when they are smaller. I’m not suggesting we segregate all the peoples of the earth, just pointing out the logistical reality that when you have a big group of people who are very similar it’s a lot easier to address their needs than a very diverse group of people who have a broader spectrum of needs. This is just human nature. So I’m not criticizing those countries for being what they are, just saying that it’s a false equivalency to suggest that any country can have a similarly successful welfare state due to a particular tax code structure.

  • Adam

    I’m gonna assume in this situation that I’m paying taxes in the UK [where I live]… and also that I’m old enough to pay taxes.

    1) I would pay nothing, and instead donate the money I would have spent on taxes to some kind of charity. Taxes are important, but given that my lack of money will not cause a substantial problem to the government and also given that I feel my money would be better spent by various charities (e.g. water aid in Africa), I feel this is the better option.

    2) I would freak out at potential governmental collapse and spent a few confused days thinking about paying anywhere from 0% to 100%, and probably end up at (current tax I pay * about 1.25). If everyone pays the same amount they usually do (or even a tiny bit less), everything would be fine, but I want to pay a little bit extra to compensate for the people who won’t pay a thing. If I can afford paying more, I might.

    3) A flat tax? I do not like the sound of that. But I’ve got no choice. If I’ve got data to hand, I would spent a while to come up with a reasonable amount so that (a) people on minimum wage feel they’re getting significantly more income than people on benefits and (b) people have to pay as little as possible for the government to be able to sustain vital services like the NHS. If not… well, the country’s fucked. I don’t even pay tax so I don’t have a ballpark figure to work with.

  • Guest

    In first and second cases I’ll start with 0% and see what happens. In the third case I’ll pay 50% only if this money is evenly distributed among every human.

  • 4lex

    It really depends on how the taxes returns to the population as services. If the governments are really focused on long term improvement of the society, then a greater taxation would be justified.

    A society can not evolve if it is constructed with egocentric people. One does not have the power to change and improve the society alone and over generations. Thus planing and funding on long term by everyone, would definitely serve a nation over generations.
    Now regarding the fix vs selective vs no taxation, take these examples:

    A) everyone pays the same percentage e.g. – 25%
    if you are making billions and pay 25% in taxes, the nation funds will increase with 25% of billions which still means billions. And if you are pour the nations funds will increase with 25% of your poverty which really does not count. Thus, it will be in the interest of the nation/governments to invest in you and encourage you to improve and make more income, resulting in taxes of 25% of that greater income, resulting in constantly increasing the nations funds, resulting in a greater fund of investment for society over a long period of time. To make it work, you will have to be a part of the society and contribute (pay taxes) and everyone will be equally satisfied on the long run.

    B) rich people pay bigger taxes (eg. 70%), pour people pay very small taxes (eg. 10 % or none.)
    In this example , pour people will not count , it will be the same as in the first example.
    The rich people however will have a bigger burden, a 70% bigger burden, thus everyone will not be equally satisfied, which results in pour or lack of motivation to improve and to make more income and more efforts will have to be made by the nation/governments to motivate one to improve . Thus, even the higher taxes will boost the funds at the beginning, over time the middle and rich people – that are the major contributors to the society, will diminish over time and will result in smaller funds of investment in society on the long run. which results in pour services for populations which in the end, will not encourage one to be part of the society .
    C) one chooses not to pay taxes
    this means that one does not want to benefit of nationwide services, this means one will have to make really long plans for himself and be more egocentric . And yet again as I said at the beginning of my comment, society will not improve, just like you can’t build something great from Legos if the Lego pieces do not fit.

    • Simon Bækkegaard

      First of all, if rich people pay that much in taxes they will not make the extra effort to get more money – work overtime etc., because they get so little out of it (Which is the situation in Denmark), generating less income than a lower tax.
      Secondly, while the individual poor (or average) person does contribute very little, there are so many of these people that it generates a lot of tax revenue – actually more than the rich people

      • 4lex

        I totally agree, but I think that the wealth has a quite bad distribution over the population, definetly in most of the coutries.And I am preety sure that 10 % of the population that includes the rich people generate more tax revenue then the other 90 % .
        Now I also disagree that the wealth should be equally distributed. But a good society has a smaller gap of wealth between the richest and the pourest person.

        • Nils Åkesson

          As Simon surely is aware of, a society should be measured on how it treats their citizens with the lesser means

      • Kathryn Warner

        The notion that people wouldn’t work as hard if they don’t make *as much* extra money is strange, because in many cases the argument is that a shift from, say, $4000 an hour to $400 an hour is sufficient dis-incentive (90% tax).

        However, the marginal tradeoff a person experiences between $400 and an hour of leisure (which is their alternative) is likely to err on the side of the money. Even incredibly high tax rates on the ultra wealthy won’t disincentivize them for that very reason.

  • In all 3 scenarios I would want to pay my share to the Fed for protecting my land and my US constitution.
    IF we all paid 10% with no deductions, the FED would know how to budget based upon GDP of the previous year. If the FED needed more money it would encourage growing the GDP and the world would take care of itself.
    Billions of dollars would be saved as the IRS shrunk and the FED had a budget they could not exceed.

    • tommo_montana

      (The Fed does not mean the USFG, The Fed means the Federal Reserve.)

      LOL, you really believe the Federal Government “protects” your land? The only time US “land” was threatened was Pearl Harbor. Our military budget should be labeled “offense spending”. There is hardly any “defense” spending in the USA.

      And you’re woefully misguided on GDP. The GDP is not income. The GDP is all the products and services created and traded. You could grow or shrink GDP and it grow/shrink/not affect incomes. The two ideas are extremely weakly coupled, to the point of being effectively NOT connected.

      The IRS is 0.35% of the Federal Government budget. Eliminating the $12.5B IRS budget is nice, but will have no effect on the federal budget, nor would your proposal prevent the government from spending more than 10% of US incomes.

      A government is NOT a business. Governments SHOULD NOT be run like businesses. A government deficit isn’t bad nor good, it’s just a possibility. Do you understand that every $1 of private sector surplus is $1 of government deficit, and vice versa? Imagine you draw an arbitrary line around all government activities, and all private sector activities. The two spaces sum to the entire US economy. Now, if the US gov’t spends more than it collects in tax revenues, the US gov’t has a deficit. Excluding imbalances of foreign trade, this government deficit is NECESSARILY realized as a private sector surplus. Deficit and surplus are tools the government can use to stimulate or destimulate the economy. The nation isn’t wealthier or poorer based on whether the government is in surplus or deficit, but rather as a result of the wealth that can be created or destroyed by correct timing, direction, and magnitude of surplus or deficit spending/taxation.

      • OK, so my wording is not perfect but the concept within my uneducated opinion (short version) is still my opinion. It just needs to be expounded upon by fiscal intellectuals such as yourself.
        I am a flat tax supporter. Keep it simple and easy to file/regulate/enforce.

  • tommo_montana

    1. 0%
    2. 0%
    3. 0%

    Income is a good thing, and therefore SHOULD NOT be taxed.

    Two cool thoughts on taxes:
    1. What we call “income” for the vast majority of Americans isn’t. Businesses don’t pay tax on gross revenues, they pay tax on net income (revenue – cost). There is a cost to providing labor, so wages AREN’T income. In fact, the costs to providing labor are often greater than the wages earned, certainly for a minimum wage job. There should be a “cost of labor” adjusted for location, that everyone can deduct from their revenues to find income. Remember, trading isn’t income, so trading 1 hour of labor for $x DOES NOT mean $x of income earned. If a business trades a retail item, they might collect $100 and cost of goods+advertising+etc might be $70. Only $30 is income, and even less of that will end up as taxable income.

    2. Why bother spending money on the IRS to catch tax cheats? Why bother with complicated loopholes and tax rules? A perfectly equal tax on wealth already exists and is completely controlled by the government. Inflation. Print $1, and every previously existing $1 is now worth $(x)/(x+1). No criminals or corporate lawyers can escape paying this tax. It’s perfectly progressive. It costs absolutely nothing to enforce. It doesn’t disincentivize GOOD things like income, wealth, and trade. The only thing it disincentivizes is holding cash, so it encourages trade and investment. What would this look like? Print the US budget every year. Every dollar in existence “pays” the tax equally, and government runs with neither surplus nor deficit.

    Post-“retirement”, I “earn” only around $3-5k per year, and pay $0 in taxes. Here’s how I retired in <2 years of work, starting with $72k in student loan debt: http://mercertom.com/how-to-retire-in-less-than-two-years/

    • tommo_montana

      Thinking about 2. in which inflation is the only tax, most people think it would be really destabilizing because printing $3.5T would devalue the $12.5T money supply 22%. First of all, that’s not that crazy, though I think it would make people stop using the US dollar as world reserve currency and the currency for oil trading. However, if we somehow managed to pass this law, wealthy people would immediately stop letting the USFG spend so much on healthcare ($831B) and military ($1.18T). It would immediately make wealthy people primarily responsible for these costs of running a society, so I think we’d rapidly get single-payor healthcare (estimated 10% savings) and much of the “discretionary” military spending ($583B) would get axed. Wealthy people would also start to realize that it’s their dollars going to pork barrel projects and every form of distasteful spending, so things would get very interesting in a hurry.

  • chreekat

    Scenario 4) Rather than contributing a set dollar amount, you pledge to contribute a certain (very small) amount *per every other person who pledges with you”.

  • Natasha Henderson

    If I have a control on % of income in all three scenarios I want a document: Where Does $1.00 Go? What fraction of a penny does the dollar in taxes go to help people? What goes for BS like lobbied subsidies that help few people? Also I would like no loopholes, period.

    1) 20%
    2) 20%
    3) 10%

    1 and 2 are because I will hope for every dollar taxed a quarter is used for others and another quarter for defense. If others in 2 suck I can feel ok with doing my part. 3 I know 10% for some is crap or chump change, but with no loopholes the richest are doing their part and the poorest aren’t getting super screwed.

  • Noodles357

    1) 0%
    2) 0%
    3) 35%

    My small contribution won’t make a difference so I would keep it for myself. In 2 you would see a situation like that of a class where everyone gets an equal grade that is the average of all grades. People would start off contributing to the cause (studying or paying taxes), but quickly stop when they assume someone else will cover their weight for them. Soon everyone is failing the class / no one is funding the government.

    Situation 3 is problematic. In a perfect world I would completely rewrite the tax code and make it really simple. Make taxation 0% for everyone making less than $20,000. Gradually raise it (by a formula) until you’re taxing people who make over 200k about 40% of income over that mark and any money over 1 million about 70%. So if you made 1 million all you would do is insert your total income online and it would pop out a % of income and dollar amount to pay. No write offs. Apply inflation figures every year or so to automatically adjust the minimum and maximum amounts of the taxation scale so we don’t have to revisit the issue.

    Since the maximum tax rate right now is around 35% I figure we should make everyone pay that amount under the rules of the game to make sure we can properly keep the government running. I would make it a little lower and force the government to make cuts to defense and other bloated programs, but they would probably cut human services funding and infrastructure so it would likely hurt us more.

  • Scipi

    In the first and second scenario I would pay 0%. In the first, I make an inconsequential amount of money, so paying no taxes would not affect anyone in any meaningful way. I could use the money to improve my life situation and eventually help others around me directly.

    For the second, I would maintain a pessimistic view and save my money in case things go to shit. If the country remains stable, I’ll work out the average amount of taxes people pay and change to that amount.

    For the third scenario, having control over people’s taxes would make me the most powerful political entity in the US, seeing how I directly control the federal government’s paycheck. I would use that control as leverage for the government to improve the quality of life for all citizens. The more they stary working for the people, the more I increase taxes as reward. They go against the people, I lower taxes. If I do not have such fine control, I would increase taxes to some absurd amount to allow the US to collapse, so it may reform under a system better for its citizens.

    • David

      I am pretty sure you could become a corporate lobbyist if you wanted to.

      • Scipi

        Probably, though a faceless corporation trying to manipulate the government so it can make more money is the last thing I’d want to work for.

  • emes

    I would take the amount of money needed by the country to run, divide by population and require everybody to pay the same amount. Taxes should not be based on income.

    • El Henko

      What if you are unemployed? Would you still have to pay the same as everybody else? Wouldn’t crime skyrocket?

      • emes

        I guess unemployed people use public services as much as employed ones. So why shouldn’t they pay for it?

        • El Henko

          I’m not asking why. I’m asking how would they afford it.
          It is a nice thought that everyone should pay as much, but most people would live in permanent debt to the government. I think you are describing a dangerous world.

          • emes

            That would induce enormous pressure, backed by significant group of citizens, to reduce both taxes and services offered by the government — and to reduce the role of the state in everyday life. And that would be a good thing. Now the unemployed have little motivation to get jobs if they still benefit from social services and would be punished for working by having to pay income tax.

            • El Henko

              It would also force workers to accept low paying jobs and bad working conditions. Also, I don’t agree that little to no welfare is a good thing.

    • Jacob Friend

      Corporations Are People too right…

      Current budget $3.8 trillion
      population aged 25+: 205 million
      Tax per person ~ $18,500
      Medium income ~ $33,000
      Average tax rate ~ 56%

      • emes

        OK, let’s just make up the sum which is the current country income from personal income tax. Not touching other taxes at the moment.

    • Kathryn Warner

      Why not base taxes on personal profit? That’s essentially what progressive tax systems are – taxation on the amount above and beyond the bare minimum a person needs to survive. This is the same as taxing a corporation on profit rather than revenue – and means the wealthy are actually taxed on their ‘profits’ less than the middle class.

      • emes

        Wealthy people are taxed less than middle class in progressive tax system?
        Sorry but that’s defying basic mathematics.

  • xstek99

    I would pay $0.00 in Case 1, $0.00 in Case 2, and $0.00 in Case 3. I’ve worked for wages all my life, and businesses have used my labor as an asset. Consider that the country ran until 1917 without income taxes, and businesses were comfortably able to earn a profit based on their property, including skilled labor. If a railroad needed to be built, people came from China to help out. If you had cotton to pick, you sent out the picaninnies to pick it. Wealth was concentrated among the property owners, and they assessed taxes among themselves to keep a stable economy. Businesses paid 100% of the tax base, and received 100% of the benefits. With WWI, there were increasing expenses in America, and someone came up with the idea of having the slaves chip in for the war. So far it’s worked pretty good. The slaves haven’t revolted. I’ve also accumulated some property to live on, and I don’t mind paying my property taxes. I still work a little bit. 🙂

    • Kathryn Warner

      Came from China “To help out” = More than a thousand dying from horrible conditions?

      Wait, I can’t tell if you’re being satirical or not.

  • Margling53

    Long ago, before many of you, my WBW children, were even born, I began working for the State of California in a low paid entry level position. Many socio-economic factors, which I won’t enumerate, meant that I had gone to college late and was now a single mother with four children to support. A famous man by name of “Dutch” Reagan sat in the governor’s seat and made many decisions which he implemented with the help of his people in the Statehouse. One of them led to legislating away the free education I had sorely needed and received at a State University because there were too many “welfare queens” and anyway people should work hard for what they got and “taxes should hurt.”

    So I sucked it up and worked hard, paying something like 12 – 15% of my small salary, or about $2500 in taxes. I had no tax shelters or property taxes (due to having no property) to deduct. Now, there came a time when the local press hounded the Great Man so incessantly to reveal his own taxes that his return was finally made public. What a surprise to find that the man who had residuals from movies and from all those TV ads he had shilled in plus property here, there and everywhere, not to mention free housing and transportation, had paid ACTUAL taxes lower than mine (never mind the “rate,” which was very low indeed). The moral isn’t really a moral. It’s a fact. Rich people do not pay taxes like the rest of us even though they love to complain about a putative rate which means nothing if you have tax lawyers who can make it go away.

    So, my children, in scenario one, I would keep paying at my current rate even though I would still hate the rich. In scenario two, knowing the rich would pay nothing, I would pay nothing and let the world descend into anarchy until people woke up to what the rich were taking as their “share” and started the overdue revolution.

    In scenario three, I would go all utopian and hope that somehow everyone would actually pay a fair share. Ten percent would be about right since if we ever managed to get the rich to pay a full 10% of their total and actual income, we would be rolling in dough and could have good schools, great roads and bridges and parks, free higher education and all those things we should have in a fair and equitable world.

    It’s not about tax rates but about who pays taxes and how much they actually pay.

  • Mike Lewis

    10% in each situation, which can temporarily rise in times of emergency. I’ll explain my rationale for both parts separately.

    My rationale for the first part is based more on the nature of percentages, than cost of living. A percent of something means that the amount can vary depending on the total. A person who brings in less total income pays less taxes than someone who brings in more income. Having a constant percentage most directly addresses the “fairness issue” on the side of the wealthy, where increasing tax brackets raise questions among the upper-class like “why am being punished for my success and ambition?” and “how am I supposed to motivated to succeed when there are such diminishing returns? What’s the point?”. I don’t think anyone on that end would complain about a standard tax percentage that everyone pays being unfair.

    If you think of the 10% income tax as a part of your total budget, like you set aside for rent, food, etc. then you can think of it like setting aside 10% of your income as supporting your community. And without your community, society, or civilization, you might as well go live on a patch of land in the wilderness. Sound nice? It could be a nice vacation, until reality sets in.

    Now, this argument raises two big questions and here’s the first: “how can the poor devote 10% of their income when they can barely maintain that minimal standard of living”. The simple, yet heartless answer, is that they for the most part need to figure out how to help themselves. My opinion here is that this is a very complicated problem that “pure taxes” can’t solve. Nor should it; taxes is merely how the government gets its money, and this problem is more relevant to what the government does with it. With the advent of the Internet and fast communication, lowered barriers to entry for entrepreneurship, the rise of the “gig economy”, and other business innovations, there are certainly options. But it mostly comes down to improving education from even the earliest stages. Getting very young children off on the right foot and maintaining the momentum through adulthood would probably help this problem more than anything. And for those that really can’t help themselves, there should be adequate government problems to provide assistance and adequate assessment of who really needs help.

    Most of what I’ve said thus far should cover the major issues that the taxpayers would raise. But now here’s the second big question I eluded to earlier, and it comes from the government: “how do we accomplish all the things that need to get done when 10% from everyone isn’t nearly enough?” My answer is, “figure it out.” This is a capitalist country and a capitalist government should solve its problems by improving efficiency, figuring out how to do things cheaper, stretching the taxpayer dollars as much as possible. Things that a regular American business would do. And when an American business can’t survive… it goes under. Now, this is what separates the two. American businesses can fail, and should be dissolved when they can’t survive, by the laws of capitalism. However, a government can’t. Because if it does collapse, the resulting chaos could mean that everyone loses (some might argue that revolutions have led to better things in the long run, but it may not apply in this situation).

    So here’s my rationale for the second part of my original answer. There may be times when the government simply can’t afford to meet the bare necessities for maintaining the American way of life. We could seriously fall behind other nations in terms of technological superiority (a.k.a. “Defense”). Or we could be facing an existential threat of some kind, like a viral epidemic. Those are obvious types of “emergencies”. But what else could qualify as an emergency? Perhaps if a substantial percent of the population can’t meet the minimum standard of living. Or if education became so bad, that young Americans can’t figure out how to build a decent future for themselves. I’d argue that both of these emergencies are occurring right now.

    Sure, by stating a specific tax percentage and then throwing in that “but it can rise when necessary” may appear to be a cop out. But my point is really that fairness should be the starting point for determining how taxes work, but the government should have provisions to take care of edge cases and other complications.

    TL,DR: 10% in each situation, which can temporarily rise in times of emergency. The nature of percentages is the basis for fairness, while government programs can pick up the slack.

  • Jacob Nestle

    My best guess, since I have next to no income right now?
    Something like 15% income tax, with something like a 10% tax on all nonessentials. That means stuff like most hygienic items and food would at least get a major tax break.
    That seems reasonable to me, but again, next to no real-world experience with it at the moment.

  • El Henko

    A. 30%
    B. ?
    C. 30%

    My A and C are pretty much the same. I would pay 30-35% which is what I pay today.

    The B scenario is pretty much Greece’s economy in the making. I have no idea what I would pick and I don’t think it would matter. I don’t trust everyone to make a responsible decision. We would all be screwed.

    • Matthew Barnard

      So you work 10 hours in a day and you think 3 of those hours should go towards the government and not your family? 20% should be tops for everyone, 10% ideally (in the US). Full disclosure I pay a 15% tax as a teenager making minimum wage.

      • Lone Forland

        I live in Denmark with a similar tax system to Sweden. Our taxes make sure that you do not have to pay to go to the doctor/hospital, to get an education etc. It makes sure that you get paid for studying and that nobody has to live beneath the poverty line. Almost all Danes have no problem with the high taxes. We don’t think of them as going to “the government” but to the things mentioned above. My answer would be the same as El Henko’s.

      • Aina

        I live in Belgium, where I went to school for free and university cos me a few hundred euros per year. I have a child who goes to an excellent child care place which costs me only 400 euros per month (which is proportional to salary of the parents, some people pay a lot less). When I go to the doctor I’m reimbursed most of it by my medical insurance, which is cheap, and giving birth in a great hospital was 100% reimbursed, and I received 80% of my salary during the 4 months of maternity leave. A few years ago, I spent 5 months between two work contracts and I received something like 75% of my previous salary during those 5 months. All of these things are possible because people pay taxes, as all of these facilities are subsidised by the government. Along with the roads, the infrastructure etc that I use everyday. So I really don’t get this feeling that the taxes go to “the government”, they go to the people, me included. I’d be happy to pay whatever needs to be paid for these things to continue happening. Even those things that help other people than me (the poor, the homeless, the handicapped etc…)

    • Ant Oni

      I’m Greek. I’d rather think that nr. 2 is not only “Greece in the making” but a classic game theory problem which would be solved in the same way in every country. Of course you wouldn’t get the same solution in every country but still you’d use the same mathematics.
      Now, if you see this as a classic “prisoner’s dilemma” formulation, the solution converges to 0% for everyone. But it isn’t, since there are more things to consider than maximising your own profit (such as the perception of fairness which enters the equation, and differs from person to person).
      Now in a torn up country like mine where nobody trusts the state and his/her fellow people, preety much nothing works anymore you can easily see total chaos coming. The interesting question is, would you get the same in Sweden or Denmark where things like hospitals, schools, public services, transportation, etc actually exist and work?

  • Matthew Barnard

    I would have everyone pay a flat 10%. There are so many pointless goverment agencies in the US it should be possible for 10% to be a reality if we got rid of some of those.

  • fxx

    Glad to see at least a few who escaped indoctrination 🙂 Taxes are coercive and hence immoral. Everyone who wants to impose taxes on others is either indoctrinated or a sociopath.

    • Nils Åkesson

      Perhaps you should work your ass of, buy a deserted island and live the rest of your life alone, so you don’t have to think on other people and how they are doing, and viceversa – it’s definitely You who is a sociopath!

  • ScribblePouit

    1) 0% because noone would know and I’m a terrible human being.
    2) 0% because anyway no public services would be working.
    3) 0% simply because having the same rate for everybody wouldn’t be fair on low wages. It would actually be dumb to have a fixed rate, as the main goal of taxes is to redistribute wealth from the rich to the poor.

    • vladimir

      “main goal of taxes is to redistribute wealth from the rich to the poor”

      Please explain.

      • Jim

        If you make rich people pay a higher rate of taxes than the poor and then you use all that money to give public services like education, healthcare and social assistance to everyone who need it, you are redistributing wealth. It’s called welfare state and it should be the main goal of taxes like in many european countries

        • Lontar

          To be fair, not ALL tax money is used in these ways. The rich still rely on infrastructure as much, if not more than the lower classes.

      • ScribblePouit

        Vladimir, sorry for the late answer, I hope you will still see this.

        Thank you for your question. I wrote this in a bit of a rush, and I realize now that it is slightly inaccurate, so I will try to correct it and explain it. By the way I’m in no way an expert in this matter, nor am I a native English speaker, so please forgive my mistakes.

        What I should have said is :”One of the main goal of income taxes is to redistribute wealth from the rich to the poor”. This statement mainly concerns European countries, and more specifically the North European countries. This is not as true in the USA for example, and I’m not sure about other regions of the world.

        This will be oversimplified, but there are two types of taxes: the ones which affect everybody the same (VAT for example) and the one which depends on the income or the wealth. Thomas Piketty in his Capital in the XXI century (I highly recommend this book by the way) has proved that in Nordic countries a certain percentage of the population receives more money through social benefits than they pay through income tax. This means that a part of the rich people’s income tax is redistributed to the poor through social benefits. This is possible because the income tax is almost zero for the poor, and gradually increases with the income. The social benefits usually are the same no matter the income (think free healthcare, education for everybody).

        Thus income tax is used to redistribute wealth from the rich to the poor, and changing the income tax to a fixed rate would ruin this process, and would be against the Northern European countries’ goal of having a more egalitarian society.

        I have no proof that this is the main goal of the income tax though, hence the change is my statement.

  • Nils Åkesson

    100% for all three, because since the premises for this thought experiment to me, sounds like total kaos & anarchy, and to support any form of democratic elected government, which I personally find a good thing. I would would rather fuck the capitalist way of doing things, than he system of contributing to the big purse for the greater benefit. Ok then I live in Denmark, where we actually have a working welfare system.

  • Oscar Jansen

    scenario 1: the same as I do right now, it’s only a very low percentage because I earn close to nothing
    scenario 2: nothing, but I would get together with a couple of people to organize and pay for essential services for ourselfs which the government wouldn’t be able to afford because nobody pays taxes anymore,
    scenario 3: 25% income tax and 5% tax over possesions over €10.000

  • Jacob Friend

    1: 0% – why not its only 1 person right…..
    2: 0% – lets face it almost everyone will pick 0% and then the state will just tax something other than income.

    3:
    Work out what services the state should supply (This is the hardest question to answer)
    Work out how much tax is needed to pay for the services the state is to supply.
    Set tax levels to meet requirement, (what % of total tax take should be income tax.)

    lets presume a significant tax take is from income tax; (0% income tax being exchanged for wealth+consumption taxes appeals but I can see several negatives)

    What rate should income tax be?

    OK well I totally disagree with the notion of flat rate income tax here is why;

    Someone with an income up to the amount required to live an OK life, lets call this the minimum income http://www.minimumincome.org.uk/ (£18K for single people) should pay NO income tax, anyone earning less than this would need to be supported by the state via benefits or would likely cost the state in terms on increased crime or over use of other services. (prison cost the state £40,000 per person per year)

    People with incomes below the minimum will be paying taxes mostly in the form of consumption taxes. with basic goods attracting almost no consumption tax.

    Well clearly not everyone can pay 0% and still receive all the services that they want from the state.

    It makes little sense for someone earning just over the minimum to start paying a massive rate so As disposable income goes up so should the rate of tax. I would have a continual marginal rate increase up to a max rate / income, maybe break this down to several discrete steps so people can work out their tax more easily.

    The top marginal limit can be something like 50% for 5-10x the minimum income (£150K – >99% of incomes), I think 50% is a real practical limit where people will start to really try to avoid paying.
    After this sort of income (99%+) wealth taxes are going to be more important than income taxes.

  • Kate

    A. 10%
    B. 10%
    C. 10%

    My current rate is 30% and I don’t see what the govt is doing so far with it!! So, in either case i reduce it to the per centage of my tithe!

  • adrg

    A. 25 % – What I currently pay
    B. 100% – Need to switch all assets to water, food, fuel as soon as possible. No taxes will be paid which mean there is no government. No government means anarchy. During anarchy money has no real value.
    C. 50% or higher – The most important resource the human race has is the diverse genetic material. The more people we help and save the better the chances of crossing “The Great Filter” https://waitbutwhy.com/2014/05/fermi-paradox.html

  • Patrick

    0% to all three. Income tax is a tax on labor and is unconstitutional. I would support consumption taxes.

    • ThAlEdison

      So does your personal constitution not have a 16th amendment?

  • Kingfisher12

    1) Probably the same as now. Stupid social conscience.
    2) I would move to a country with a functioning government, since this one would be bankrupt pretty quickly.
    3) About 50%. Enough to create a Nordic-style socialist system with highly progressive programs.

    • jonathan

      I’m heading to your country Kingfisher12

  • Margling53

    I can’t believe how sweetly trusting the Dinner Table participants are. First, you don’t live in Sweden or Norway. You live in the most selfish nation ever created. You need to start with the premise that the rich—individuals and corporations—pay essentially no income taxes, maybe no taxes at all of any kind. So in your Utopian planning, be sure to come up with a way to make the rich pay a fair share, either through magical thinking or through a plan of action that involves leg irons and dungeons and some kind of torture—oh, wait, that’s magical thinking too.

    • Kingfisher12

      The scenarios provided are super simplified, but as with most thought experiments, the object is to invoke thought.

      The scenarios above aren’t really possible because that isn’t how human societies work, and people really do respond to taxation in significant ways. It is absurd to think that an entire nation’s tax system could be reduced to one or two lines; the thought experiment requires a suspension of the laws of reality.

      So in the exercise, when we suspend enough reality for the questions to make any sense, we can conceive of a useful answer. What makes this a useful exercise is it provokes us to think about our individual and collective responsibility to pay for the things our governments might do.

  • David

    Scenario 1: 0% (sort of). I would not allow myself to be taxed, but I would donate a significant amount of money to causes that I believe are underfunded (like Planned Parenthood) which offer critical services to our society, instead of things we overspend on like the military industrial complex. It’s not like it would matter, anyway. In the grand scheme of things, whether it is 0% or 100% of my income being taxed, it wouldn’t even register on the charts because it would be so incredibly minimal.

    Scenario 2: 0%. Because I know that the people who have the income that needs to be taxed will be too greedy to give up anything for the betterment of society, and as stated above, mine would have minimal impact. I would wholeheartedly want to trigger the ending to an Ayn Rand novel and show everyone how terrible of an idea objectivism actually is, and demonstrate that supply needs demand just as much as demand needs supply.

    Scenario 3: 90%. People don’t need to lavish themselves in luxury in order for our lives to have fulfillment. If humanity wants to progress, then we need to realize that helping each other and contributing to a cause that is greater than ourselves is what matters the most. All of us would be better for it.

  • A. Nonny Muss

    Scenario 1: 0%. Because heheheh…. I’m a terrible person.
    Scenario 2: Anarchy is about to happen. 0%
    Scenario 3: 80%

  • Matthew

    In the first scenario, I would derive some reservation level of income which provides a satisfactory living standard for myself. Any income above that level I would pay in taxes (provided the government was effective) or donate.

    We must be aware of the extreme rarity of events it takes to be where we are now. As an individual person. And if you are in a position where you have a reasonable income, you are extremely lucky. Of course if my income allowed for it I would have a nice TV and a nice home to put it in, but there is always going to be a limit where you are happy as is, (Tim describes this extremely well in ‘Life is a Picture, But You Live in a Pixel) and once you have found that point the best thing you can do is help the less lucky.

    https://waitbutwhy.com/2013/11/life-is-picture-but-you-live-in-pixel.html)

    In the second scenario the same logic applies as our actions should not be determined by the group majority. Even though it is highly probably most people would pay zero taxes if given the freedom to choose, it does not remove any value of wealth distribution.

    The third scenario is tricky as I believe in a progressive tax system. However if forced to pick a percentage, I would have to account for the lower income brackets and choose one that does not hinder day to day living. The additional income acquired from the lower tax rate (income – reservation income – tax) would be donated to chosen organisations.

  • Khy Boogie

    Currently I live in a country where income tax is 0% across the board. Goods and services are more expensive, and there is little market competition, but it’s my choice, to a degree, what I spend my money on. I see little difference from living in countries where tax is 30-40%.

    Ideally money is eventally made redundant, so tax is irrelevant, there is an abundance of green renewable food and energy and people work to enrich the global population.

  • Kingfisher12

    I answered these below, but I don’t think they are really the right questions.
    At the most basic level, there are three basic questions relating to taxes.

    1. What portion of the nation’s natural and human resources should be reserved for government operations?
    2. What is the easiest way to appropriate those resources?
    3. How can the negative impacts of appropriation be minimised?

    Excepting totalitarian regimes, most large countries require people to pay taxes somewhat voluntarily. If everyone decided to cheat on their taxes as a matter of course (allegedly what people in Greece do), then there is nothing the tax collector can really do about it.

    The scenarios really should be;
    1. If you found a way to cheat on your taxes with no chance of being caught, would you do it?
    2. If everyone realised they could cheat on their taxes without personal consequence, is a Greek scenario inevitable?
    3. If all tax breaks, loopholes, and deductions were eliminated, and cheating on taxes were impossible, what would a fair general tax rate be?

  • TPZ

    1) 0%!
    2) 0%!
    3) 0%!

    We are all already taxed on a day to day basis in more ways than we realize.
    A quote i came across some time ago which rings true:

    “…When one takes into consideration all these taxes – direct and indirect, excise and impost: income (federal, state/provincial, and local), sales, GST, Sin taxes (alcohol, tobacco), permits (firearm, building, septic, well), endless banking service fees (credit cards, stocks, bonds, accounts…), endless fines and penalties (traffic, invoice late fees…), travel (flight, hotel, rental), capital gains, corporate income, court costs, licenses (marriage, dog, hunting, fishing, driving, piloting, all professional, all business), insurance (property, life, medical, vehicle, employment, workers compensation), fuel permit, gasoline (about 37%), inheritance, inventory, IRS/CRA interest and penalty charges (tax on top of tax), luxury, property, real estate, social security/Canada pension, truckers road usage, registration fees (birth, all professions, all vehicles), school, sports, communication (TV, cable/satellite, internet, fax, endless telephone service fees (universal, federal, state/prov., and local charges, surcharges, minimum usage…. ) tolls (road, bridge, tunnel), utility (water, gas, electricity, garbage), and the biggest, most insidious of them all: inflation which is tax on the ‘money’ itself, …. breathe …. we are being taxed well beyond any bracket which we might have…”

  • Mieke Oost

    I live in the Netherlands and our tax system seems quite fair.
    To see what I have to pay check this (and no, I’m not telling my salary but as I think this is a quite fair system, you can assume I am not in the 52% bracket):
    https://en.wikipedia.org/wiki/Income_tax_in_the_Netherlands
    What
    it comes down to (as I assume not everyone wants to read the wiki) is
    that when you earn around 19.000 euro’s a year you will pay around 31%
    tax. When you earn between 19.000 and 33.000 a year you will pay 31% for
    the first 19.000 and 42% over every penny you earn over 19.000. When
    you earn over 33.000 euro’s a year. The first 19.000 are taxed 31%, the
    19.000-33.000 is taxed 42% and every penny over 33.000 is taxed 52%.
    This would be a lot easier explained with a drawing but I hope this
    makes sense.As I just found the way to ad a drawing, check it out.
    The pink example is when you earn around 23.000 euro’s.
    You will pay around (since I haven’t given you the correct number) 5.890 (31%)euro’s over your income to 19.000.
    You will pay 42% over (23.000-19.000) 4.000 = 1.680
    As a total you will have to pay 7.570 euro as income tax to the Belastingdienst (I think it is called FICA in the US.)
    For me this is fair because for every penny/cent you earn you will see something on your pay check. And how lucky are those in the 52% bracket. When you earn as much as the do, you are not allowed to complain anymore.

    scenario 1) I would pay 40%
    scenario 2) I would pay 0% I think the whole nation would pay nothing. Then everything would become really expensive with the taxes the country would need, so I will be saving my money for that.
    scenario 3) I would pay 10%. There are a lot of people who cannot afford the high taxes. So this is a way to keep it low for them. Maybe the established companies can pay a lot more taxes. Not sure where to get the money otherwise.

    • Joe

      It’s remarkably similar to the system in the UK and in my opinion is the fairest way to assess tax. It’s called PAYE (Pay As You Earn) but the way I feel the UK system is probably better than the Dutch system you describe is that everyone receives a Personal Allowance up until those earning over £100,000 p/a. The first £10,600 (for 2014/15) you earn is free from PAYE tax as people earning such a low level of income will already be claiming benefits from the government in order to actually live. Why tax that income and then give the tax right back to them in benefits?

      Then there’s National Insurance Contributions which are a whole different thing. Currently I pay 19% total tax on my income, made up of various taxes and various bands of tax, which seems like a reasonable amount to expect everyone to pay.

      Now if only we could get the pesky ‘foreign based’ corporations to do the same.

  • Ralph Hat-Farmer

    Great question. One side of me wants to design a fair tax system. The other says that even the fairest system ends up giving money to a government… I’m fundamentally in favour of socialism, but dubious if any elected body is actually capable of achieving it (I am aware of no examples in history that have truly worked, beyond a few small scale isolated autonomous communities).

    That aside, for a fair tax system heres my proposal:
    First calculate the decent living wage – the wage where you can comfortably enjoy a healthy and fulfilled life. This would based on living costs (food, rent, services) in each particular place, plus some percentage for disposable income. Any income below that decent annual wage threshold would be untaxed. Any income between 1 and 2 times the decent wage would be taxed at 20%. Any income between 2 and 5 times would be taxed at 50%. and anything above 5 times at 90%. Inheritance tax would be charged at 99.9% for everything after ten annual living wages – no-one gets a free ride just cause their parents got rich.

    And then how would this utopian system distribute all this income?
    I would feed it into free education (both practical and academic) and free healthcare… also research, and small business incubators to support innovation. We could afford to invest in sustainable energy and infrastructure.
    Instead of giving out benefits for nothing, I would require unemployed people to study approved online or in person courses in exchange for money (subjects would be very diverse and of the applicants choosing).

    • Tony

      I think you mean communism, or should study more modern history. Most European countries and Australia have been socialist for a long time and its working quite well for them.

      • Ralph Hat-Farmer

        What I describe isnt communism, because people could still work for a wage and the wages could be differentiated. For me true socialism would help the poorest people most, which I don’t know of any working examples on a national scale.

    • Goran

      That sounds a lot like ex communist states. I would assume that when the system works for the poor and mildly against the rich, dissatisfaction of the rich makes them use their power to reach their own benefits for the system. Notice how all the communist states are ruined by corruption and greed, because those are effects of power abuse. I live in one ex communist country. Our education is still free but since we included western methods, it’s in a very bad shape and a lot of people are considering private schools that you pay for. I am not saying that western ideas are bad, they are good if implemented well, but road between communism and capitalism is through greed, corruption and sometimes civil war, sadly.

    • Miguel Bartelsman

      Might I suggest a tax rate based on a formula? your system basically punishes people as someone earning 5 wages is left with less than someone earning 4.9.

      x/(10+1.1x) might work, it gives of a curve that starts ascending quickly but tapers off as it reaches the people with higher incomes eventually capping ~90%

      Vertical axis is % of taxes, Horizontal is income in minimum wages. Top line is taxes according to income and bottom line is income after taxes

  • Chiel Wieringa

    I wouldn’t pay a fixed percentage but pay on things I think my (tax) money is spent well on else it still wouldn’t be voluntary taxes. One month this could be 80% while the next month it could as well be 0%. The scenario doesn’t matter for me.

  • Goran

    One thing to look after in scenario 3: Income is different to every person but prices are the same. So if someone i a village has got 100 dollars per month and in the big city someone else has got 10000 dollars per month, 20% for the first guy means that he will skip meals to survive the month, and for the other guy means he can go to expensive restaurants without worrying. That’s why the richest people on earth that are not paying taxes are actually stealing from the poor. I would never choose a number in scenario three.

    For scenarios 1 and 2, I would change the percentage accordingly to my change of income status. As mentioned above, it is really important to give a bigger percentage as you get richer. Note that when you don’t have expenses as a poor person, you get richer faster, but you slow down when get rich enough and decide to raise tax percentage.

  • Sean Swalve

    This was a great question because it resulted in different answers than I expected after long thought.

    1. Being a student, I have very left wing political views and because I really dread being a hypocrite with my views, I would choose a 50% tax rate (slightly above my projected income and property taxes for my career)

    2. This one some serious tragedy of the commons issue. Along with earlier replies, I would spend a ton of time fearing government collapse. Giving everyone a choice, only about 20% (via tragedy of the commons studies) of people will pay any taxes with even fewer paying more. Paying any taxes would be flushing any money better used to sell assets and flee the country before poor riots ensue.

    3. 60%: Adequate redistribution would give a ton of money to the lower classes and with a flat personal tax, capital gains count as income. This 60% could finance an extremely robust socialist state. Sure, some corruption will lead to less than perfect spending. But we’d be a much stronger community driven nation. Besides, think of how much more money could go to scientific research! I do however fear what the military would do with double the tax revenue…

    • Han

      I wonder if you considered the deadweight loss from 60% taxation. That implies a lot of economic activity that will just not happen.

      • Sean Swalve

        Certainly it’s an unsustainable tax with our current productivity but it would serve for a few years to equalize income ie: using welfare to create an artificial wage rise. Because of property, sales, income, corporate, and payroll taxes stacking in the current tax system the effective increase wouldn’t be very much for middle-income Americans but very noticeable for lower and higher income brackets. It’s definitely not a good system because a flat tax can never be but I thought it was the ideal overall number with all things considered.

  • Jim Mataczynski

    Of the listed options, only #3 is viable. 10%. The remainder of the federal income should be from excise taxes and import taxes. Incidentally, federal income tax reporting is voluntary. So….if you don’t report, you don’t pay. However the federal tax court doesn’t quite see it that way.

    • Reniro

      I’m curious about why you’re in favour of excise and import taxes. These are detrimental to efficiency and are generally driven by cheap political maneuvers, rather than sound reasoning.
      I agree with your 10% income tax. Most governments are bloated and could do with far less money to waste.

      • Jim Mataczynski

        Prior to the income tax, in the US, the US government was funded nearly exclusively via excise and import taxes. WWI put a large demand for money at the federal level and WWII only worsened this. A 10% flat tax on the surface may look as though it hurts low income people (it does), But our current system hurt middle income people and makes it hard for them to advance to wealthy people. Currently, the poor pay little to nothing (and often receive), the middle class pay 25-35% with few tax breaks or incentives, the wealthy and rich effectively pay less that 10% due to incentives, parking money in untouched areas, creating various trust structures, creating tax exempt foundations, leaving funds in a business, expensing a business for “things” etc. Excise (sin) taxes generally tax items (excessively too) which are usually considered luxeries and not needed for day to day esistence (all of the fun unhealthy stuff). Import taxes do help support local economy by keeping cheaper goods of the market and thus supporting current jobs. Unfortunately they stagnate an industry and drive up the cost of goods (hope you like driving your grandfather’s Plymouth).

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  • Joe90

    1. The mean of what others of my income bracket pay.
    2. See number 1 (I wouldn’t know what other individuals had chosen to pay). If this is bending the rules too far, then I would work out what I wanted to pay for (education, police force, maintenance of infrastructure and so on) and work out what every persons share should be and pay accordingly.

    3. No taxes at all. The ‘government’ would take all of the population’s possessions when they die, taking care of any dependents such as widows or elderly parents incapable of making their own way. No-one would be allowed to leave money to their children or have any other heirs. This would encourage spending, so there would however be a small tax of 7.5% on any monetary transaction.

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  • Lontar

    1. 0%. Fuck ’em. Maybe I’m just evil. If this were the case I’d probably be more generous with my money but who knows. I have trouble believing anyone that says they’d voluntarily pay a considerable amount of tax given this scenario. The rationalization function in my brain would be operating at peak efficiency, no doubt.

    2. 0%. The country would collapse. Furthermore, I’d be stockpiling assets because money would swiftly lose all value.

    3. My initial reaction was that because I live just a touch above the poverty line is that I get a lot of clout here. I’d probably pay a solid 50%. That forces our highest tax bracket (and the severe majority of total taxes paid) to increase their taxes by just over 10% (of their income). I’m not sure what the government would do with all of that excess cash… chances are most of it would be wasted. Chances are tons of that money would be kicked back to the highest earners and lobbyists. Chances are I wouldn’t see much, if any of my additional taxes paid back in my own pocket. You know what? Fuck ’em, I’m paying 0% in this scenario too. The U.S. had a good run, time for some anarchy!

  • walnutsushi0903

    Hi guys! This is the first time I’m participating in this discussion and the rules are left up to our community so…
    2) I’m speaking as a citizen from Singapore. In such a ‘fine’ country where we basically pay for every single thing plus extra TaXeS, sometimes even as a student you just wish that the taxes would be lowered. Sure the growth would slow down, but it’s fine because I’m a student! But, personally (this is so contradictory) I feel that I would continue to pay my taxes, possibly even higher. Taxes are used in many ways, such as national security , to build new commercial buildings, and is very critical to a nation’s growth. We all depend on the country for our daily living, and so does the country. So even if we want to say ‘screw them go ***’, we still have to realise that our government body is made up of humans who basically make the country their job. So there is NO WAY we can screw them. In a few words, I screw you, they screw you.
    (srsly sounds like a lecture but it’s probably the only thing I can come up with)+(I would only pay higher IF I could)
    3) You’re basically asking me to be the government. I would let the government decide this as they are the ones who know enough. I don’t qualify for the post of other-worldly-policy makers.
    1) I would imagine any human with a common-sensed monkey in their head and a walnut head would say 0%. Sorry to inform you all but I’m not Ghandi. 0% for me!

  • trogdr

    scenario 1 0% why the fuck not
    scenario 2 100% someone has to pay taxes
    scenario 3 100% UNLIMITED BUDGET AND FOOD AND HEALTHCARE

    • JH1010

      So scenario 3 is basically communism.

      • Miguel Bartelsman

        not basically, IS communism.

      • ANON

        Communism has no government. Communist states are supposed to bring communism around, but mostly they just do tyranny.

  • slavery_4_all

    100%

  • noanarchy

    1. 0%. Since it’s guaranteed that others have to pay taxes, if I keep my money, there wouldn’t be such a huge impact in the economy. As long as we don’t go into anarchy, no taxes please.
    2. Shoot. Okay, I’d pay a little more than the projected tax bracket for my income range (I a student currently so no income *sighs*)
    Hey, someone’s got to pay, if not our economy crashes and development is a far away dream. I’d probably rope in a few people to do the same, cause face it, given this privilege, most people are going to put 0% like i did just now.
    3. 20%. That’s the current tax rate for my country, and status quo seems to be alright, Plus we basically have to pay loads of other things like ERP (they’re machines to tax you while you drive), COE (huge tax that make cars soo expensive), GST (loads of other people have this too) etc.
    I think 20% is fair then

  • JH1010

    Given that I have no income 0% tax and 100% tax are the same thing so I can’t answer this question.

  • Han

    1) 0%. I would donate small amounts.
    2) 0%. I would donate small amounts.
    3) 20%.

  • Miguel Bartelsman

    1) I would probably donate around 35-45% I’m a firm believer that socialism works.
    2) Even though that’s the amount I would pay, game theory tells me that the majority of people would not pay any taxes, even when it’s for the benefit of everyone.
    3) I would make everyone pay 45%, read 1 for the reason

    Of course this is assuming I’m living in a country with a competent government, if that’s not the case then 0% for everything, I don’t want this fucking corrupt government taking a single penny.

  • Nate

    I’d prefer not to have taxes based on income at all, but on consumption. Zero percent income tax for all. Large sales tax on everything. Whatever number it has to be. I’d suggest at least 100%, if I were to pull a number out of a hat. Heck, make it 200% (or whatever it has to be) so we can eliminate corporate tax and property tax as well!
    Assumptions:
    We want a government, and rules, and security, and infrastructure, and a social safety net of some kind, and health care, and food safety, etc.
    Taxes must be levied so government can do anything.
    Things we want to discourage get taxed at higher rates.
    Things we want to encourage get taxed at lower rates.
    Subsidies usually end up with some form of unintended consequences, and taxing is less ambiguous.

    NPR’s Planet Money podcast got me on this bandwagon a couple years ago. I think the title was something about economists picking/creating the perfect presidential candidate for the 2012 election.

    • emes

      VAT is basically the tax on consumption. It’s the main source of income for European countries, leaving income taxes (especially corporate) far behind.

      There are however two big problems with VAT:
      1. It’s not flat rate. Someone invented that food should be taxed lower, as well as construction and transportation services. These exceptions change from country to country and there’s hell of bureaucratic work to keep it running and even more work of taxpayers to pay lower rates if possible. But that is typical problem to any non-flat taxes.
      2. Most countries outside EU don’t have VAT. (That’s the main reason why shopping in US is much much cheaper). So, if you are importing things, you are obliged to pay VAT so that foreign products aren’t too cheap and people don’t switch to external supply. Imagine how much work is being wasted on avoiding and enforcing that!

      • redpill2010

        The biggest problem with VAT is that it hides itself from the end consumer, which is the whole point. To be blunt, the last thing politicians want is for you to know how much you really pay in taxes, because then you will more keenly hold them accountable. Consumption tax is the right way to go, in my opinion, but it must be exclusive and transparent to the end consumer.

        • emes

          That’s a good point. The same applies to personal income tax and social security which are being paid by employer not the employee. As result, many people are convinced that their employer is paying them a pittance when actually a big chunk of that money is being taken by the state.

    • ANON

      Sales taxes are terrible because they’re regressive, ie they hit poor people harder than rich people. You can argue about whether we should have progressive taxes (the opposite of regressive) or flat taxes, but nobody sane wants regressive taxes.
      Use your favorite search engine for evidence of consumption taxes being regressive.

      • redpill2010

        There are ways you can address that, like offsetting peoples’ tax liability up to the poverty line. In that way the truly poor pay nothing.

        Also keep in mind in the income tax system, it is the wealthy who have the most capability to hide income and dodge taxes legally. The average American tax filer doesn’t even itemize their deductions. So while in theory a progressive income tax structure would be just that, in practice it really is not.

        If you make the consumption tax on new retail goods and services only, the poor also have the opportunity to avoid paying taxes by buying second-hand goods. Meanwhile, the wealthy (who are going to buy new stuff and use more services) will have no need to hide their income, and there would be no financial gymnastics that would allow them to avoid paying taxes. It also ensures those who attempt to dodge the income tax altogether by operating in a cash economy also contribute their fair share. So from a practical standpoint it would be a much fairer playing field than what we have now.

        • Daniel Kranich

          One thing that people forget about when talking about this is raw materials. Raw materials are not “Produced” so how do you know if it is “Second Hand”? Does the supplier who buys the raw materials from miners, loggers, etc pay the tax and then pass it on to the consumer? Or do you tax the consumer and the suppliers get the raw materials tax free?

          Lets take an example. A logging company cuts down 10 trees. The 10 trees are sold and shipped to a lumber yard who cut the logs into different types of lumber. The lumber yard then sells the lumber to a pencil making factory who then take the lumber and turn it into pencils. The pencil factory then sells the pencils to Wal-Mart who then sells the pencils to you.

          At what point is the flat tax introduced. Is each sale taxed, effectively taxing the wood 4 times? Is the consumer who buys the pencil the only one who is taxed, letting all of the companies in the middle not pay any form of tax for producing each stage of the product? What about in the case of a contractor who builds a house for you and uses lumber directly purchased from a lumber yard. Does the contractor pay the tax on the lumber or does the homeowner pay the tax on the lumber?

          These are just a few of the questions that I have come up with in the past 10 minutes after hearing this idea. Im not saying its impossible to solve these issues, im just thinking that it is no where near as simple as everyone in this thread makes it out to be.

  • Nollam

    Really interesting survey and the results are surprising to me. There’s such a strong socialist slant to the responses; it seems that people favor big government, universal benefits, and redistributing wealth irrespective of how it’s come by. In fact, those who claim to have the least resources seem to want the highest taxes, as they’ll likely pay less but gain more. There’s an air of entitlement that I find disquieting.

    For what it’s worth, I’m not in favor of big government as it’s too inefficient, easy to corrupt by interested parties and often allocates resources counter to my wishes (on war machines, for example). I also don’t believe that people are owed a living; just because you exist doesn’t mean the state (i.e., your fellow tax paying citizens) should buy you a wide screen TV. In my view, governments should employ taxes to ensure that the basic fabric and humanity of a modern progressive society is maintained. Security, education, food & shelter, health care, basic infrastructure. But beyond that government should get out of the way, and leave it to market forces to build efficient services.

    The problem with high taxation is that it stifles growth, as there is less money to invest to grow businesses and to create employment; and there is less reward to flame the entrepreneurial spirit. Whilst there are fat cats that sit at the top of our somewhat broken systems, there are also huge numbers of professionals who study hard and then work long hours to build a career for themselves. In my opinion they should be rewarded for their labors, not taxed to hell to pay for people who lack the intelligence, ability, discipline, creativity and passion to make it on their own. Of course, all citizens need to be protected and afforded opportunity in a modern society, but people should be rewarded based on their achievements.

    So that said, my answers are:

    1. I’d pay the going rates that everyone else pays — I may not like it, but you’ve gotta be in the system to change it.

    2. I’d pay zero. I’ll need all my money to fly to another country once the riots start.

    3. 15-20%, flat tax, no exceptions. There’ll be a bunch of accountants, legal dudes and civil servants out of work — but the system will be vastly more efficient and less prone to loop-holes.

    I don’t mind the idea of deferring tax until the wage for a basic standard of living is earned, since otherwise the tax just gets reclaimed through benefits. However, I don’t support the popular idea of progressive tax, going to 50% when you earn X and then 90% whey you earn Y. It’s a punitive disincentive and results in people moving their assets offshore. Have people forgotten that % means that the tax paid is proportional to the money earned? I am in favor of consumption tax, especially when used to influence social behavior — so higher taxes on gas guzzling cars; minimal taxes on clothing, food and essentials; etc.

    • Tom Miller

      I just want to counter some of your points:

      “Really interesting survey and the results are surprising to me. There’s such a strong socialist slant to the responses”

      You shouldn’t be surprised. In fact, when asked about how they would structure their “perfect society”, a large majority of people chose some form of “Utopian socialism”, similar to that most commonly depicted in Star Trek. A no-class based system without money, with everyone working towards a common goal. So it should not be of any surprise that when asked about taxation, the majority of people lean towards a more socialist model.

      “I’m not in favor of big government as it’s too inefficient”.
      I think that’s a merely trope that people trot out without any facts to back it up (say the lie enough and it becomes truth). Unless of course you can provide us with evidence to back that up? The British NHS, for example, is 2x more efficient than the US private healthcare system, and as someone who’s got a lot of experience with both, I’m well placed to judge them both.

      Of course, there are some things that government shouldn’t do (that it does do), but there are also some things that it is incredibly well placed to do. There would be no Space-X post at all if it weren’t for “big government”. Unless of course you think going to an investor 50 years ago with this pitch would work: “I’ve got this great idea, we’ll shoot 5 people in a rocket to the moon, which which may well be fatal for them all, and we won’t make any money doing it, and we’re not even really sure what’s up there anyway”

      “just because you exist doesn’t mean the state (i.e., your fellow tax paying citizens) should buy you a wide screen TV”
      I love this idea that having a TV (you can just say TV by the way, seeing as 99% of TVs that were made within the last 10 years are “widescreen”) is somehow the pinnacle of luxury living. In actual fact, this argument works against the position of most that use it; it demonstrates that people on lower incomes don’t hang onto their money at all, they spend every cent they get. So this “free” money doesn’t stay in their pockets for more than 5 seconds(!), it goes straight to local business where they spend the money. Of course, you may think that Warren Buffet own’s 10,000 TVs, but I’d guess he has no more than 5.

      “The problem with high taxation is that it stifles growth”.
      See my answer above. High taxation actually is proven to help growth (see US 50s/60s where growth was rampant and tax was far higher), provided the majority of government spending goes to those on lower incomes.

      As someone that runs a business, I can tell you straight off the bat that if I had a choice between slightly lower taxes, or more customers, I’d choose more customers. And more customers means more staff, which means more local spending, which means more customers for local business, which means more staff for those business, which means more spending. Growth, in other words. This common idea that lower taxes also makes business employ more people is ludicrous. I employ more people when there’s more demand, and we need staff to meet that demand.

      “In my opinion they should be rewarded for their labors, not taxed to hell to pay for people who lack the intelligence, ability, discipline, creativity and passion to make it on their own”
      Another trope; people that need help or don’t have a job are lazy bums, whose goal in life is to sit around watching Dr Phil. It’s a lie; most people actually want to make something of their life but circumstance is preventing them from doing so: lack of decent education (taxes are too low), lack of healthcare (healthcare is private and too expensive), and lack of opportunity. Yes, there are some that have no desire to improve themselves, but for the most part they are few and far between, and even for them society should shoulder some of the blame. And as above, all the “money” they get just goes back to local business anyway.

      “I am in favor of consumption tax, especially when used to influence social behavior — so higher taxes on gas guzzling cars; minimal taxes on clothing, food and essentials; etc.”
      Consumption tax (VAT), is incredibly regressive; the poor are dis-proportionally affected by it. Those on lower incomes spend the majority of their money on Food, Clothes, and transportation. So VAT takes money out of these peoples pockets, giving them less money to spend within the local economy, which just hurts local businesses. Mr Buffet meanwhile (who, by the way, is not in favor of a flat tax), spends a tiny percentage of his income on food, and spends a lot of money abroad, and is therefore actually rewarded for doing so(!).

      Just wanted to counter some of your points.

      Oh, and if you hadn’t guess, FEEL THE BERN! 🙂

      • Chet

        Tom, there’s no need to get testy …
        If you are going to start your paragraph with things like “Unless of course you can provide us with evidence to back that up?”
        Then please provide some credible evidence that “The British NHS, for example, is 2x more efficient than the US private healthcare system” and that “as someone who’s got a lot of experience with both, I’m [ you’re ] well placed to judge them both.”

        • Tom Miller

          I’m not testy, not at all 🙂

          As for evidence, the UK has 27.43 Doctors per 1000 people. The US has 24.22 Doctors per 1,000.

          The UK spends $3405 PPP, the US spends $8508 PPP.

          In terms of GDP, The UK Spends 9,6% of it’s GDP on Healthcare, the US spends 17.9%.

          So there are clearly more doctors, and half as much is spent.

          In terms of outcomes, the UK ranks first in Quality of Care, Access, and Efficiency, whereas the US is 5th in terms of Quality, 11th (last) in terms of access, and 11th (last) in terms of efficiency, as per a recent commonwealth study: (source) http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror

          As for experience, I lived in the UK for 31 years, and now live and work (and have done for the last 7 years) in the US with my (American) wife.

    • Smashy

      “People who lack the intelligence, ability, discipline, creativity and passion to make it on their own???” You do realize that people usually don’t make it on their own because they lack privileges and advantages in life, not any of those qualities you mentioned? The number one predictor of whether or not you will graduate college is not how hard-working or intelligent you are; it’s how much money your parents make. America is not anything close to a meritocracy. Reality is more like this cartoon: http://thewireless.co.nz/articles/the-pencilsword-on-a-plate

  • DeeDee Massey

    I don’t know…….

    I’m still pushing to allow deductions for wedding and divorce costs as “gambling expenses”.

  • d

    Those are pointless options because taxing everyone or a large group an arbitrary amount completely disregards how they have come about their income. I would tax profits massively but basic income very low. Earning money on interest or investments should be made illegal or at least disincentivised heavily. The point imho is to achieve a comfortable level of living for everyone but someone earning money doing brain surgery shouldn’t have to contribute the same tax as someone earning money doing phone sales or someone working in administrative job where their only real contribution to society is not being a criminal. Society is not improved by existence of abusive and exploitative practices, and the entire monetary system including taxation is all geared to creating and maintaining exploitative way of being.
    PS i work in admin and feel terrible that I am taking a living away from someone for whom this would be an enjoyable and useful way to spend their days just because I need the money and this is the easiest way I know how to get it.

    • laura

      I see what you mean, society is geared towards exploitation but is it really that simple. How can we decipher between jobs that are an asset to society and those that are not? Surely most contribute. How can the brain surgeon complete her/his live saving work with out NHS admin staff? What about the person who works in phone sales that sold a phone to the person who was able to call an ambulance to get to the hospital for the surgery?

  • Kathryn Warner

    1. 50%, Because I will be in a high income bracket in about three years, and it doesn’t hurt to contribute to the society that reared me and put me in a position to be able to enjoy my earnings.

    2. Still 50% (above). What other people decide to do is irrelevant in my own personal decisions; individual morality is not popularity driven.

    3. I can’t choose because because any number would be too low for some and too high for others.

    • David

      Good news Kathryn! When you are filing your taxes you are allowed to pay any amount you choose (provided you pay AT LEAST the amount you are legally obligated to), so you can pay 50% at any point you’d like.

    • ANON

      3. use magical tax powers to pressure government into setting up income support, such that the tax isn’t too much for anyone.

  • redpill2010

    My answer is the same for all three. I would pay the equivalent of approximately 20% of what I spend on purchasing new retail goods and services. Why? This is about what a national sales tax would need to be if we finally came to our senses and stopped this freaking horrible idea of taxing income.

    Consider this:

    “An IRS publication shows nearly 169 million individual tax returns (including all individual tax forms and estimated tax forms) were filed in 2012, costing over $20 billion in compliance costs. This is not the cost of actually paying taxes, but only the cost of filing.

    The time consumption is further burdensome to individual tax filers. Considering 8 hours each for 169 million returns, Americans spent over 1.35 billion hours filing individual taxes.”

    http://taxfoundation.org/blog/cost-tax-compliance

    Add in business taxes too and it gets worse:

    “All said, Americans spent over 3.24 billion hours, which is about 369,858 years, preparing and filing tax returns in 2012. Considering individual, business and employment taxes, this costs $37 billion annually in compliance cost for federal taxes alone.”

    http://taxfoundation.org/blog/cost-tax-compliance

    But many say, “its a necessary evil.” But that’s totally BS. The reason we have an income tax system is not because that’s the most effective way of funding our government (the early United States mainly funded itself on tariffs on goods from other countries, and while protectionism is not so in-vogue, a lot of our modern trade deals seem to be screwing American workers so that we have access to more cheaply-manufactured junk, but that’s a subject for another day), but because it allows politicians to use the carrot/stick approach and pick winners and losers. The incredibly arrogant mindset is that they, politicians (probably considered the least ethical of any profession), somehow know what’s better for people than they do (yeah ok you insider-trading, bribe-collecting, crony capitalistic miscreant).

    Income taxes are also incredibly unfair. While the graduated income tax is designed to make the wealthy pay more, it is on the backdrop of a system that favors their wealth in every other way. Thanks to the leviathan that is 70,000 pages of tax code created by the aforementioned miscreant politicians, it is precisely the wealthy that are best equipped to take advantage of any loopholes or incentive structures. The average tax payer doesn’t even itemize their deductions!

    Corporate taxes operate the same way. The average person may think “hey these companies need to pay their fair share” but that’s very one dimensional thinking. Well first, there’s the fact that many are more savvy at this game than the politicians (or just pay them off to get special tax breaks) – see chart attached. Secondly, for those that do pay taxes, you have to realize the cost of taxes is just another line item expense for their business. Yes they might do some financial gymnastics to avoid paying any more than they have to, but at the end of the day whatever the remaining amount is becomes just another expense. So who really pays that? Does it come out of the CEO’s bonus? Of course not. The company’s customers ultimately pay it. So by advocating for corporate tax, what one is really saying is “please hide from me the real amount of taxes I pay by embedding some of it in the cost of goods and services.” If you like to live in self-delusion so be it, but it really should not be the law of the land.

    So for a moment, imagine what would happen if we eliminated all income taxes and business taxes and replaced it with a single point-of-sale retail sales tax. Instead of businesses becoming tax payers (and avoiders) they would become tax collectors, and the best part is that in many states this infrastructure already exists for local sales tax purposes. It works easily, efficiently, and does not require billions of hours of tax-filing work to comply with. For the end consumer, we would spend zero time on tax compliance! The country would spend billions of dollars less on tax compliance, and use those previously wasted dollars toward actual productive activity.

    Then the common objections come:

    1) “Oh everything would be so expensive no one would buy anything.”
    a) Keep in mind that base prices of goods and services would eventually trend downward because the cost of taxes and tax compliance would be gone. So as prices go down, the percentage of our tax applied would result in a lower absolute amount, and prices wouldn’t be nearly as high as you would think. Also, don’t forget you’d suddenly be paying in GROSS earnings. You’d be taking home your entire paycheck. So you’d have a lot more money to purchase things with too.
    b) The talking heads on CNBC might love the churn and burn of us Americans buying an endless stream of cheap crap at Walmart that was made in Chinese sweat shops. And we know the story, the damn thing breaks and it’s so cheap that it’s not even worth fixing, you just go buy another cheap one. We have become a disposable economy. Land fills piled high with cheap junk that isn’t worth the material it’s made out! BUT what if we had a tax system that incentivized second-hand products (because only new retail goods and services would be subject to the tax). Instead of people just throwing away their cheap junk and buying more, it would be worth it to buy higher quality (and dare I say American made?) products, and then sell them to a thrift shop when no longer needed, or keep them in good repair and use them for longer. When you think about that, it solves a great number of issues from the economic impacts of acquiring huge amounts of raw materials prior to manufacture all the way through the end at the land fill.

    2) “Rich people would just illegally import everything to avoid paying taxes.”
    a) This is sort of a silly argument because the vast majority of rich people have ZERO interest in breaking federal tax law. That is precisely why they spend so much on tax attorneys and accountants to avoid paying taxes legally. Plus, they are rich! They don’t want to risk something as precious as their freedom. Sure there are outliers, but that is the case with anything.
    b) Wealthy people appreciate convenience and are willing to pay for that; it is not convenient to illegally import all the goods and services you need.
    c) Also as a side note, suddenly there would be no reason for Americans or American businesses to keep their money off-shore. We would see a huge influx of money and investment which would do awesome things for the economy.

    3) “This is totally unfair to the poor because they spend a higher percentage of their income on purchasing things.”
    a) This can be addressed a number of ways. The most efficient is to offer people the ability to have any taxes paid up to the poverty line refunded (one system, called the FairTax, uses this idea). For wealthy people, it may not even be worth the paperwork, but for someone who is less wealthy it would be a big deal, and if they were truly poor, it would offset their tax burden entirely.
    b) For consumer goods, those with lesser means can avoid taxes by purchasing things second-hand.
    c) Keep in mind, everyone will be getting their entire paycheck and have more dollars to spend.
    d) All income is spent eventually, it’s only a matter of when and by whom. So even wealthy people with a big savings account will eventually pay taxes on that money, even if it means it is their children spending their inheritance. Whenever it is spent, it is taxed.

    4) “People won’t buy as much junk and save money instead.”
    a) And?
    b) This is another fundamental of financial health that would be a huge positive for us over the long run.

    5) “The government will just bring back the income tax later and we’ll be stuck with both systems.”
    a) Extremely good point. We would want to repeal the 16th amendment and make sure the beast doesn’t grow two heads.

    Ok this is getting long but you get the idea. But the bottom line is that the income tax system is horrible for the country, and it is only miscreant politicians and their megalomania that is preventing us for having a vastly superior system that would save us billions of hours, billions of dollars, spur huge investment in America, and supercharge our economy.

    • ANON

      I was going to read your post, but then I saw you’re a protectionist. Protectionism is about giving your money to a few (small) groups in your country while everyone else gets fucked (meaning you, your friends, most people in your country and everyone outside it).

      • redpill2010

        For one, I didn’t say I was a protectionist, I just said it isn’t popular and that our trade deals don’t seem to be having nearly the beneficial impact that they should. I don’t advocate shutting down free trade, but if it were that simple we wouldn’t have these elaborate trade treaties. Point being, free trade only works if it goes both ways, and it’s not the end of the world to have a tax policy that indirectly promotes domestic manufacture of high quality goods as opposed to a tax policy that encourages a disposable economy. Part of the problem with the trade subject is that people only seem to want to talk about it in extremes (you’re either a protectionist or a free trader) when the reality is much more nuanced.

        For two, the subject has nothing to do with trade, so I’d request you not judge the tax question on the basis of the above.

    • Colby

      This is the most thorough, well-put, and soundly thought out tax system recommendation I’ve ever read. It perfectly encompasses what I’ve believed for years would be the best way to handle taxes, and I’m a CPA with a master’s degree in accounting! I wish more people understood this logic.

    • Rob D

      Another latecomer here, but who cares. As much as I hate paying taxes, I have favored this tax scheme for a while.

      An alternate way to protect the poor would be to exempt “essential” goods and services from taxes. Things like groceries and utilities. Yes, the rich would also be able to buy these types of things without paying taxes on them as well, but this would would require absolutely no effort on the part of the lower income segment of society to keep their income for essential things. Then, if at the end of the month they can afford a big-screen TV or a PS4, they can pay taxes on that with the rest of us.

      The biggest issue with allowing some to file for refunds is that this system could ultimately be exploited or modified by others to pay less taxes. The income tax system USED to be simple, but powerful lobbies and the extremely wealthy have been able to build loop-holes into the system. It would be difficult for the CEO of Exxon to convince congress that yachts are “essential”. Conversely, I don’t think anyone would care that the same CEO got to buy bananas tax-free. And to placate the “fare share” crowd, the rich spend more money, and thus would pay more taxes.

      Another plus of this system is that it makes the government more accountable. Because EVERYONE sees how much taxes they’re paying (because it gets added on to their bill at the end of a transaction), if taxes were to increase, the public would immediately notice and want to know why. There is the caveat that the government would be required to remain solvent, not being able to spend money that it doesn’t have.

  • ant1248

    10%

  • Jim Jaggers

    All in taxes, about 35%. Basically what I am paying now. 18% effective federal income tax rate, 7% FICA, 8% state (sales tax in my case), 2% local (property and sales taxes). This is what it takes to pay for the government services we have. If we can agree on fewer services, then we can pay less in taxes.

    The above applies to all three scenarios. But I strongly believe in progressive taxes. So I don’t like scenario 3.

  • wobster109

    1. I’d pay whatever my income bracket would otherwise have me pay. I alone can’t make a significant different to total taxes, not even if I poured all my income into it, so the next best option is to live by the same rules as my neighbors.
    2. This one is, in my opinion, the most interesting problem. If I assume everyone else thinks more or less like me (the same way everyone would get approximately the same answer if asked how two kids should share a cookie in various circumstances), then this question really becomes “design a tax system”. I’d calculate the operating costs of national, state, and local governments (including financial aid to the poor) and divide that among everyone else. I’d probably end up with something similar to the current tax system, except with less taxes starting later and increasing more quickly. Then I’d pay whatever income bracket I was in. I’d trust everyone else to be doing similar calculations and to come up with similar results.
    3. This one is incredibly hard, because someone on minimum wage would have a real hardship paying anything. I’ll go with whatever percentage exactly covers government expenses.

  • John Von Achen

    I believe individuals should seek their own best advantage within the laws that exist. I will not concede an advantage given to me though I would not pretend an advantage is given fairly. I also believe it is the role fo government to establish rules to lead to long-term sustainability and growth of the economy.
    1) Without any penalty, I would pay zero. Maybe my personal guilt would kick in, but I would pay zero and give myself an economic advantage over all others.
    2) The whole country would fall apart because most people would pay zero just as I would. Even if I were wealthy I would use libertarian services to make for my comfort. I’d buy the things I needed from the existing commons and sell off the balance. Eventually in order to prevent the collapse of society this policy would be abandoned and taxation would be restored to the world.
    3) Here is where it gets different, I would prefer a progressive tax, because a flat tax does nothing to prevent or restrain income inequality. It doesn’t matter what level the flat tax is set, the economy will establish wages and costs at level that will satisfy the market. Our economy is based on a system that averages to 24.6%, I would prefer a stronger safety net to encourage more entrepreneurs, ensure no poverty regardless of situation. Single payer health care and retirement benefits should also be included. To accomplish this the tax rate based on current systems would need to be slightly more than 40%.

  • Sam

    Scenario 1) Imagine you’re given a special privilege—paying taxes is voluntary. You can pay as little or as much as you’d like, and no one else has this special privilege—they are all legally required to pay their taxes just like they are now. What percentage of your income would you decide to pay?

    A progressive rate that increases exponentially based on the amount I make in direct relation to the cost of living. Any income I make, regardless of source, at or less than 20% above the poverty line I pay no income take on. This scale will increase as my income increases in comparison to the poverty income line until any income that is a thousand times above the poverty income line will be taxed at 99%.

    Scenario 2) You’re given the same privilege as in Scenario 1, except now, it’s a nationwide privilege. Every citizen gets to decide for themselves what portion of their income to pay (assume everyone would have to decide individually without any knowledge of what anyone else was paying, and each person’s decision would forever be kept a secret). What percentage of your income would you pay?

    See the answer to one.

    Scenario 3) You have the privilege of choosing what percentage of your income to pay in taxes, but now, whatever you choose, everyone else will have to pay that same exact percentage of their own income. What percentage would you pay?

    See the answer to one.

    Are your three answers the same? Different? If different, what are the reasons?

    All three answers are the same. I feel that we all have a responsibility to each other and that even if others don’t fulfill their obligation it is still incumbent on me to do so.

    Note:
    I am willing to adjust the actual percentages and the basics but the spirit will remain the same.

    • Martin Seaton

      I was stuck on how to express myself on this issue, but your post did it beautifully, so thank you!

      (And I’d love for Scenario 3 to be something I could just do, if I could implement a personalised version of the progressive tax on everyone so that their percentages didn’t just follow mine.)

      • Sam

        Thank you.

        I actually came across this on Friday and had to give myself the weekend to let it work itself out.

  • gthog61

    I’d pay 20% across the board. The govt has a lot of fat in it and no current incentive to trim any of it. Flat is fair. If I work harder I shouldn’t be penalized for it based on someone else’s arbitrary definition of “fairness”.

  • sportibus

    Scenario 1) still about 35% (I reckon it’d be fair to stay in the same tax group as I am now
    Scenario 2) probably 10% (assuming that the government cannot provide the social welfare it can provide with higher taxes, thus one hase to set aside more money for oneself)
    3) I’d go with 50%, BUT 75% of the current average income would be tax free. So if the average income is 1000/month and your income is 1600, you’d only pay taxes on the last 950.
    I personally oppose the flat rate income tax. If person A has a job that doesn’t pay well, and Person B has a very good job and earns 10x that, still Person B doesn’t need to spent 10x more money on food/water/electricity. It’s probably closer to twice as much. Thus person B should be required to pay higher taxes.

  • ANON

    1) Whatever I’d pay without magical privilege, because it wouldn’t cripple me and I wouldn’t feel like a dick (the latter has significant monetary value)
    2) 0%, save to move to a non suicidal country
    3) Figure out efficient government services that can be provided at a tax level that doesn’t cripple the economy while making sure the services support people appropriately and so on. (I assume my magical powers give me enough leverage over the government that it will behave. Otherwise see 2) )

    For 2) and 3) the reasons are the same, to wit: money isn’t fucking magic.

  • Very late to join the party, but there is this itch that I cannot resist when taxation enters the conversation.

    Option 1
    I’d pay zero. And the reason for doing this, though counter-intuitive, is the same reason that makes you pay anything at all. See, paying high under this option makes you believe that you are doing good for society. And this is where my logic kicks in- the less money I give the bigger the chance of me doing good for the rest of society.
    The 10-20-30% that you’d otherwise give as taxes, I’d use to start a movement/startup/what have you, and thus contribute far more towards a prosperous society. The government, as per usual, is less efficient with your money than you are if given the option. If however, you are not the entrepreneurial spirit and cannot spare extra time for such activities, there are many non-profit organizations, or even startups that change the world daily, that are in need for funding. Your money will fare better on Kickstarter, then buried within government bureaucracy.

    Option 2

    Still the same answer. The reason is the same and the circumstances changing cannot affect it at all. The first thought that pops up to mind is chaos, anarchy… However, having in mind that the government is fighting for its own survival here, you can expect smart PR moves that will convince many people to still obey the tax system. This time, voluntary (as we’ve seen with many of the answers here).
    What you’d end up with, is a society that chooses which entities to fund- private ones, or an ever shrinking government. This will lead towards a gradual transition from government provided services to private companies competing in a free market society.

    Have this in mind- those of you who’d rather pay taxes at this point (many have already said yes), even if the tax system totally collapses, you would be a great target for companies trying to make profit. How so? You’d concern yourself over “but who will help the poor, and those in need?”, and people with more entrepreneurial mindset than yours would instantly seize the opportunity, providing just that (at cheaper and more effective rates than government does) and gladly take your money for the service- now called “helping society”. (you’d be amazed with what online marketing can do when it comes to taking money from you in order to fund a noble cause). At it will work better than ever.

    Ex. many people like yourself will want to help society>> companies would see demand and try to offer a service/platform/what have you that scores high at “helping society”>> they will do it better than government for fear of competition taking your money instead. They will make profit, you will feel good about yourself, those in need will have better conditions that government could have offered.

    Option 3

    Still the same answer. At this point you already get my reasoning, and I will only add another principle I personally follow- “you cannot tell others how much to give for the sake of your beliefs”.

    Imagine that some of you out there are figuring out that the “perfect” tax rate would be 50%. Or the progressive variety.. Or 3, or 15 or 60%… That means that if you are wrong (and there is no way that you cannot be wrong about this), the whole of society will have to pay for the reckless decision (in my opinion an anchor that holds innovation back).

    However, if you go with “a number of your choice” (not zero, mind you, for some would still want to pay the government) you cannot be responsible for the mistake that others make. If some choose to persuade themselves and others to pay high taxes, so be it… If you and I choose to give our money to innovative startups that do good by society, great again.

    Does that make any sense?

    • Dawid

      You do realize that without taxes there is no government, without government no enforceable law and without that no companies or start-ups, as there is no property other than that which you can physically carry and protect from the masses of looters. Just as no standardized education system, no army to defend from foreign taxmen, etc etc

      Conclusion= system collapse with zero tax as a minimum is needed to provide for basic rights and rules.

      • Not really when you think about it.
        People will still want similar things, and most will voluntarily pay money to companies that provide services such as protection for instance.

        Larger governmental bodies can still be elected, but with a much more insignificant role, taking care of external and internal protection of property and safety.

        All this is merely a utopian dream though. My thought was a minimal government, and hence my tax contribution is zero. Others would like and expect more from a government- hence they like to pay more- voluntarily.

        We are now in a position where some are overpaying for the same public services that are available to all- though at different prices. Why is someone successful being punished for his success and contribution to society, his money taken away from him, and given to others? Our government now, is “providing” far more than what you mentioned above- minimum wage laws, oppression to personal choices and liberty.

      • Michele West Ceron

        there were no federal income tax before 1913, the gov only taxed businesses and that is where they got their money from. This scenario is regarding personal taxes, the gov would still be collecting taxes from businesses and therefore would still be having a sig money stream. The gov has shown that they never do anything good with our money, they are beyond wasteful with it. They dont deserve our money. And if the gov cannot keep themselves afloat on business taxes and they collapse, obviously that only shows that they are a shitty worthless government and we are better off without them

  • Ksenia Kolchina

    I would focus not so much on the notion of fairness, but on the human psychology here, specifically on motivation.

    People are inherently selfish, it’s in our DNA to first and foremost optimise our own payoff. If at this point you’re thinking that you’re all so altruistic, then you might as well realise you were not born this way – it’s something you’ve built up. Surely when you were a crying baby you were concerned about getting yourself some milk, instead of worrying about your sleep deprived mom. Consideration for others is a social construct that’s designed to help us in getting on with peers – again, for our very own good.

    With that in mind, generally all policies, including taxes, are based on our extrinsic motivation to benefit from others (in this case, through joint resources), as well as on the fact that only very few really want to contribute the most (really). Which is, in fact, a paradox.

    So the answer is in doing a good maths on how my input in each of the three cases is affecting me payoff at the end. Which is most probably 1<2<3, where in the first case I pay the least to benefit the most.

  • Michele West Ceron

    0% federal income tax for all 3 scenarios

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