So, back to the tax code, how to make it fair(er). I already talked about classifying people and corporations based on how far away they were from actually making stuff that people buy, with people and companies that people go to for the actual product like people in the performing arts, or professional athletes who are the product being S0, and banks and investment companies who just make money being classified as S5. The tricky parts were the S2 through S4 companies and people, because deciding where on the separation spectrum a company belongs has a major impact on their tax schedule.
But today I’m going to talk about the Ms, the multiples of the minimum wage that form the basis of the tax brackets. As a review, M1 is minimum wage times 40 hours a week times 52 weeks a year, M250 is M1 times 250 or basically someone making as much in a day as a person on minimum wage makes in a year. Today a person in the M1 bracket pays 15.2% (IIRC , that’s close) in SS and Medicare taxes but no income tax, and the person in the M250 bracket pays about 1% in SS and Medicare taxes and roughly 22% in income taxes, depending on how good their tax accountants are. In the middle you get the M5 and 6 people who pay the biggest part of their income in taxes, with 15.2% SS and Medicare taxes and 15% or so in income taxes. And the people who actually make things get taxed the most…
I think this is bass-ackwards. The people that make things should not be the ones that pay the most taxes, because making things drives the economy. So I have different tax brackets depending on how far removed you are from actual products.
S0 people and companies are the ones that are the product, and as such have the most volatile incomes. their first tax bracket starts at M0 and runs to M50 at the 15.2% that is SS and Medicare combined, with no income tax. The next bracket starts at M51 and runs to M100 and has the 15.2% SS tax and a 20% income tax on the income over M50, so it becomes extremely progressive as only the marginal taxes are charged not taxes on the whole income, like tax brackets currently. The next bracket would be M101 through M250 which has a 25% marginal rate on income tax with the SS and Medicare taxes holding steady, with the final bracket at M251 to infinity and a 30% income tax and the SS and Medicare tax still holding at 15.2%
S1 would be similar to S0 with more brackets and a lower upper threshold from the zero income tax bracket to the second bracket. M0 to M25 is zero income tax but the 15.2% SS and Medicare tax, with the next bracket being M26 though M50 with the SS and Medicare tax and 10% income tax. Above that is the same as the S0 tax brackets.
S2 the first and second tax brackets would be the same as S1, but the third tax bracket would be M76 through M100 with SS and Medicare at 15.2% and 22.5% income tax and above M100 being the same as S1 and S0.
S3 is like S2 until M151 to M250 with a 27.5% income on top of the 15.2% SS and Medicare tax, and M251 and above being the same.
S4 shifts the first tax bracket down to M1 with only the income from M0 to M1 being free of income tax and every other bracket being shifted down one, and the M251 and above having 35% tax on top of the SS and Medicare taxes so the brackets would be M0 to M1 SS and Medicare only, M1 to M25 being 10% income tax on top of SS and Medicare, M26 to M50 at 20% income on top of the SS and Medicare. M51 through M75 would be 22.5% on top of SS and Medicare, and M76 through M100 having 25% income tax on top of SS and Medicare. M101 through M150 is 27.5% income tax on top of SS and Medicare, and M151 through M250 is 30% income tax on top of the SS and Medicare tax, then M251 through infinity being 35% on top of SS and Medicare.
S5 is where the tax brackets get nasty, because S5 people are mostly parasites economically. The brackets start at M0 and go up every multiple of M through M251 with the combined income and SS and Medicare taxes being 99% (83.8% income tax and 15.2% SS and Medicare) at M251 to infinity, and M1 being SS and Medicare and 10% income tax on top of that and increasing by 0.3132 every M step to M251. Yes, there are literally 251 separate tax brackets for the S5 “worker”, but their taxes are truly “progressive” as their income increases and most of the time paying about the same as their less-parasitic counterparts up to M25. For the mathematically challenged that is $377000 at the minimum wage that prevails today and doesn’t actually start to bite until you get really up there in the wage pyramid.
And that’s my idea to make the tax structure more fair. I’m sure I need to tweak the lower tax brackets to keep the collected taxes the same as they are now if not a smidge more, as the M multiple seems to be a bit on the coarse side.