What is a fair amount of tax for the rich to pay?

Bob is an ace Doodad salesman. His annual income is $10 million USD. So he’s quite well off.

Disregarding any write offs, deductions, tax shelters, etc., what is the fair amount of income tax Bob should pay on exactly $10 million? I’m talking total (income tax for federal, state, county, and city). What is a fair number for the collective governments to confiscate from Bob?

I’d say between 20% an 35%. But for me, a better answer than an actual number is: the same percent everybody else pays. If you make $10,000,000, pay say $2,000,000. If you make $100,000, pay $20,000.

Completely meaningless question

Actually, it’s an excellent question. If the push is always to have the rich pay more, at what point is it unfair to do so?

You cannot answer the question without first deciding what tax has to pay for.

I think that to provide a good answer to your question we also need to know a few other things:

a. How much is it fair for the governments (federal, state, local) to spend?
b. How much value is it fair for Bob to get out of [a]?
c. What is the income distribution of the population?
d. How much of [a] is it fair to be raised by taxation?

(a), © and (d) are inextricably linked to the OP - if we don’t know how much we’re spending and how much of that is raised through methods other than taxation then we don’t know how much tax revenue is needed, and if we don’t know how many people are earning how much then it’s going to be mighty hard to figure out what everybody’s share should be.

And that’s leaving aside a number of other related issues, like what tax scheme is “fair” (flat tax? progressive tax?), should our tax codes be used to provide incentives for things that we as a society value?

And then the answer becomes - as little as possible to pay for that.

I don’t think developing a fair tax distribution is feasible from a practical standpoint.

Ignoring the use of the term “confiscate” to describe tax collection, one possibly fair method of distributing the tax burden would be to make everyone’s loss of marginal utility equivalent. So the tax burden suffered by Bob would depend on:

-Overall government outlays (how much total tax needs to be collected)
-The income distribution of the population and Bob’s place in that distribution

The problem would be in defining a utility curve for money (or even several) that accurately reflects the preferences of the populace.

From a more practical perspective, I think you just try to ensure that Bob can’t get a better deal elsewhere in terms of net benefits. In other words, if Bob and his similarly wealthy friends are starting to relocate to a different city/state/country, taking their productivity and tax payments with them, then the tax rate is too high.

The problem with this is that it ignores the marginal utility of money. While the same box of cereal costs $X whether you are rich or poor, actually paying that $X is much more of a financial burden if you are poor than if you are rich. You might be able do things like create a standard deduction, whereby the first $Y of income is completely exempted, and then flat-tax the remaining income. In this way you could make sure everyone would be able to maintain some minimum level of utility and standard of living. But then you’ve just shifted to problem to defining what a fair value of $Y is, and you still don’t solve the fairness issue from a marginal utility perspective.

I think you can answer it by just trying to find the point where it seems unfair, as I did. But that’s also why I reverted to a precent, so I see your point.

That is an entirely different question. You don’t have to know someones job title is to ask them how much they earn every year.

This is an unanswerable question, because everyone has a different idea of what is “fair”. Unless a definition is created that everyone can agree on (which I doubt is possible), there is no way to answer it that everyone will agree with.

A progressive scale - the first, say, $10 000 tax-free, the next $90 000 taxed at 33%, the next $4 million taxed at 35%, the last $5 million at 40%. Do the exact maths yourself, I think it works out to around 3.7 million.

Which would be why this is in GD not GQ

Let’s say that’s fair. We’re at 37%. But is there a number in your head at which point the burden becomes unfair, and the government should not seek to tax at that rate?

I don’t think is fair, or reasonable. And the two are not always the same.

If someone makes 30,000 a year, they’re going to need their 20% a lot more than Bob needs his. It’s unfair to make them both pay the same percentage on that situation, and it’s certainly unreasonable.

This is basically how I’d set it up. With all income types treated as one – stock income doesn’t mean you pay less, or more, than wage income.

I might have it set up with different numbers, though.
The first 20k tax free, 30k if you’ve got a kid.
20k-50k taxed at 10%
50k-80k at 25%
80k-100k at 30%
100k-1million at 40%
Anything over a million at 50%
Yes, higher taxes… But not so much higher when you account for every type of tax already payed, keep in mind federal state and local income taxes would come out of that.

People would also see a lot more benefits out of a system I ran with those taxes. Well funded, well ran education, possibly with subsidized or free college programs for many carreers (medicine, teaching for sure… Liberal arts, probably not). Well funded, single payer health system with an emphasis on preventative care. Community reclamation projects aimed at increasing income and lowering crime rates in at-risk areas, which wouls exult in lower incarceration rates, more tax income and in the long run, lower taxes…

Just vote for me on 2012 and see all this done and more! :wink:

Top federal marginal income tax rate of 50%.

If we can start at the other end, then George Harrison thought 95% was unfair.

Let me tell you how it will be;
There’s one for you, nineteen for me.

As well as what does “fair” mean. Most discussions of this sort involve extremely sloppy usage of this word.

I’ll take a stab at this.

The median income for a family of three in the US is roughly 50k. Bob personally (we have no information on his marital status) makes 200 times the average income for a family. He takes home enough money to fully support 600 people a year at a reasonable standard of living. Obviously it would be unfair to charge bob two hundred times the standard tax rate or have him foot the bill for 400 working adults, but Bob is certainly in a world of his own when it comes to standard of living.

I suggest that anyone bringing in over a million a year should be considered to be in the highest tier of standard of living allowed. Essentially I’m drawing no difference between Joe well to do company owner, and the Hiltons’ and Gates’ of this country. That may seem a bit unfair to some, but remember that at only a million a year, you are still drawing 20 times the income of the average family, or about enough to fully support 60 people. That said, I propose that additional income over a million be taxed at a standard rate of 66% allowing the earner their exact third share per the average of a family of three. Before anyone starts crying, remember that 330,000 is still enough to fully support 6.6 full average families. The earner may halve the amount that goes to the goverment by making charitable donations in the same amount to an approved list of private, non-religious, non profits of their choice.

Lets use a Rawlsian view of fairness. What sort of system would you want if you had no idea who you were. you could be black, white, male, female, rich, poor, smart, dumb, industrious, lazy, disabled, healthy, etc. You jsut have no idea. In that situation what would you want the tax system to look like.