No. Tax rates that high encourage wealthy people to spend money on accountants because the benefits are so great. Each dollar that is untaxed is like $5 taxed. It’s like multiplying their income by 5x. They will literally spend billions on it and avoid it.
The better way to do it is through enforcing corporate taxes and setting minimums. Say a corporation has a $100 million in taxable income and a tax rate of 20%. Increasing the tax rate by 5% yields $5 million dollars relatively easily. All you have to do is monitor the business expenses and make sure no one is using private jets, cars, credit cards, or real estate for personal reasons. You can tax the money at the source and corporate workers have little reason to hide their boss’s illegality.
Now let’s say you didn’t increase the corporate taxes, so the tax rate is 20% and $80 million is available to shareholders. To get that $5 million from shareholders you have to increase taxes on all forms of investment income by 6.25% (5/80). Plus you have to audit everyone to guarantee that you get all the money. It costs more because there’s more people involved.
An 80% income tax would not affect investors unless they received unqualified dividends (look up “qualified dividends”). Not only that, they could delay the income taxes entirely by not paying out the money. Now you get no extra taxes and the company uses the money to lobby for Republicans to lower income taxes (then pay out later).
No. Tax rates that high encourage wealthy people to spend money on accountants because the benefits are so great. Each dollar that is untaxed is like $5 taxed. It’s like multiplying their income by 5x. They will literally spend billions on it and avoid it.
The better way to do it is through enforcing corporate taxes and setting minimums. Say a corporation has a $100 million in taxable income and a tax rate of 20%. Increasing the tax rate by 5% yields $5 million dollars relatively easily. All you have to do is monitor the business expenses and make sure no one is using private jets, cars, credit cards, or real estate for personal reasons. You can tax the money at the source and corporate workers have little reason to hide their boss’s illegality.
Now let’s say you didn’t increase the corporate taxes, so the tax rate is 20% and $80 million is available to shareholders. To get that $5 million from shareholders you have to increase taxes on all forms of investment income by 6.25% (5/80). Plus you have to audit everyone to guarantee that you get all the money. It costs more because there’s more people involved.
An 80% income tax would not affect investors unless they received unqualified dividends (look up “qualified dividends”). Not only that, they could delay the income taxes entirely by not paying out the money. Now you get no extra taxes and the company uses the money to lobby for Republicans to lower income taxes (then pay out later).
Corporate taxes are easier.