December 18, 2020

0 income Tax Bracket

0 income Tax Bracket it all started with something Alexandria Ocasio-Cortezsaid on 60 Minutes. “But once you get to the tippy-tops — on your 10 millionth dollar, sometimes you see tax rates, as high as 60 or 70 percent…” She suggested the top income tax rate forthe super rich should be 70 percent., The current rate is 37 percent. So, many pundits treated it like a radicalidea., “… moving her party further and furtherto the left with calls for a 70% tax rate.” “Doesn't this take away and sap the incentiveto join that billionaire class — to strive for that?” But that 70. Percent number wasn't pulled outof thin air. There's actually, an economic theory behind it. The 70 percent number comes from two economistswho were interested in a concept called “optimal tax theory.” And it starts with a simple question:, How canwe tax people so all citizens are as well-off as possible? And we can understand this concept by lookingat two. Potato farmers — a very rich one and a poor one. The government comes to, collect taxes. One potato from each farmer. And that doesn't really, hurt the rich farmer. If he loses that potato, his life doesn'tget much worse. In other words, that one potato.

Is worth almostnothing to him. But for the poor farmer, one potato is wortha lot more. His family might eat.

Less that day. This is not a scenario where everyone is aswell-off as possible. So the government decides to shift the taxburden. It will increase taxes on rich farmers to pay for programs that benefit, the poor., Because as long as the rich farmer has more,one potato is still worth less to him than it is for the poor farmer. So the rich farmer's taxes go up. And then they go up some.

More. And more and.

More people are better off. But then something happens: When the government takes more, the rich farmerno longer thinks it's worth, it to grow so many potatoes. So he grows fewer potatoes. That's okay for a while. But then, one year, the government asks foreven. More. And when the rich farmer hands it over, thegovernment realizes that it's collecting fewer. Potatoes than the previous.

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