Should the Federal marginal tax rates be adjusted for regional differences in income? Making $120,000 in New York City is very different from making $120,000 in Bangor, Maine. Living and working in Manhattan and making $120,000 probably doesn’t make you part of the upper class, but $120,000 in Bangor makes you part of the local upper class. The cost living in Manhattan will take most of your salary away. If we want a progressie tax system should we adjust it to regional difference in what a salary means?
No. There are too many other variables in place. I’m always very suspicious about these “cost of living” type comparisons. The person in New York is paying higher rent than the person in Maine. However, the heating bills are higher for the person in Maine. The person in New York doesn’t probably have a car. The person in Maine does and pays substantially more for transport. The person in Manhatten has competitve air fares to almost any place on the planet. The person in Maine pays high airfares. And so on…
Also, this would have people claiming residence in a “low tax rate” area. Sam Walton might have been able to claim his legitimate home was in Arkansas. Donald Trump can’t.
I’m fully in favor of a progressive tax system, but adjusting for regional differences would make the tax code so damned complicated, come April 15, more and more people would likely prefer evasion over griping.
The variations even within a region are simply too great to be of any using in making progressive taxes “fairer.” Shall we tax the yuppie living in fashionable Georgetown at a lower rate than we tax a similar person making the same money who chooses to live in a crime-ridden disaster area like Anacostia, which is but three miles away? Quite literally, where do we draw the line?
Well, you made a good step in the right direction by spotting the problem, but you instantly came to the wrong conclusion.
Stepped tax rates are always unfair. Every scheme I’ve seen for making them fair just screws them up more. You want to balance the system? Don’t look at changing the rates and giving people breaks. Look at eliminating deductions and exemptions.
You want examples? I spent ten years building up a small business, and taking very little money out of it. Then I sold the business and got a big chunk of change. That pushed my income for the year up into a higher tax bracket. Because I made most of the money in one hunk, I had to pay more in taxes. Bahhh. (And no, they wouldn’t let me income average back that far).
You earn $60,000 a year and I earn $30,000 a year, and we each pick up a side job that earns us an extra $10,000. Why should you have to pay more taxes on that $10,000 than I do?
“Fair” is obviously a subjective term, which means this whole thread should be over in IMHO instead of GD, but the way I see it, “fair” means everybody pays the same share. If Bill Gates earns 1,000 times what I earn this year, he should pay 1,000 times the taxes. Not 100 times, and not 10,000 times. If you earn a tenth of what I earn, you should pay a tenth of the taxes, not zero because you’re under some arbitrary limit. Fair is a level playing field for everyone.
That was a capital gain, not income. You should have been taxed at the capital gains rate.
Because he needs the $10k less than you do.
Oh how the red states would howl if you attempted to raise there taxes higher than those of the blue states.
Never work. Politics. Complexity. Makes local towns and states attempts to game their tax codes to attract corporations even more difficult - depressed areas would have a very hard time attracting any sort of decent employer - who wants to move somewhere if they perceive they would be screwed at tax time.
You’re not serious, are you? What possible relevance could that have? You’re saying that if two people earn $10K, the one who needs it less should have more of it taken away from him?
And, by the way, what makes you think the amount you earn in a year is any indicator of what you need? If my car breaks down and has to be replaced, should I pay less in taxes because I need a new car? And who decides whether I really need a car, anyway?
I hope that was just a facetious comment, because it certainly isn’t a valid argument.
I agree with that. It’s called progressive taxation. I’m sure there’s been lots of threads on it here, and it is basically how the US tax system works. Higher marginal tax rates means a more progressive tax system. I think taxing poorer people at the same, or even higher, rate than the wealthy is unreasonable.