Tag Archives: tax structure

Waiting to find out the Sprint Cup champion on a Wreck-Free Sunday

I have been watching the pre-race shows since 1100 this morning and it’s 1400 and the race still hasn’t started. In fact the drivers aren’t even in the race cars yet. They didn’t start until after 1415 and the first caution flew at 1430…

Other than the final race of the Sprint Cup championship and my new bike getting started I don’t have a lot to talk about other than beer.

I have a new favorite beer. I used to prefer Shiner Bock for a long time because it had so much more flavor than your typical American Pilsner. Well my new favorite is still broad by Shiner, and it’s still a dark beer, but it isn’t a Bock it’s Shiner Black Lager. It’s made from an even darker roasted malt than Bock, but it’s brewed lager style which gives it a lighter body than a bock. This ends up with a beer that has a flavor similar to a bock but is as drinkable as an American Pilsner. The only problem I have with the beer is they are so proud of their imported Czech hops they put so much in they almost completely overshadow the flavor of the malt and yeasts. I should say I’m not a big fan of hops, in fact before I discovered the joys of dark beers my favorite was a beer I can’t remember the name of that had the minimum amount of hops to be classified as a “beer” in the US. It was cheap but they spent more time on their malts and yeasts to bring up the flavor without the bitterness of the hops to cover up shortcomings in the rest of the brewing process.

Mrs. the Poet has emphatically stated that she is NEVER going to ride in anything resembling the Sprint T I was discussing back during the summer in this blog. Her requirements are a windshield and roof with roll-up windows and AC and a comfy seat. Mine are more about going, stopping, and turning with enough range to last as long as my bladder does. While these requirements are not diametrically opposed, meeting Mrs. the Poet’s requirements does add weight which makes meeting my requirements more difficult, especially the weight of the roof and windshield raising the center of gravity of the car which does no favors for the “turning” requirement. I think I might be able to make us both happy if I take a shell from an ’80s era econobox, blow out the floor leaving the dash and everything else intact and slapping it on a tube frame with a V8 and decent suspension. Or I could take that econobox and put in a modern high-output 4 cylinder engine and upgrade the suspension to rally standards (gravel rally) to get the handling and braking up to my desires. Using a 1980s era ‘box instead of a new car takes about 1000 pounds out of the equation right off the bat whichever strategy I choose with the modified econobox.

As has been pointed out to me my suggested changes to the tax structure would result in a decline in tax receipts because of a lack of taxes on the lower tax brackets, and that if I kept the S0 and S4 and S5 brackets and dumped the S1, S2, and S3 brackets (or rolled them into the S4 and put in a large standard deduction that went down as the S classification went up) I would get what I wanted for the “takers” of the economy while not impacting the “makers” negatively. Even my suggestion of reducing our military spending to just the first 3 behind us in combination instead of the next 10 we still couldn’t balance the budget on the tax brackets I had initially proposed.

And the race has gotten real exciting now that the sun has set…

And now the race is over and Denny Hamlin won the race and Jimmy Johnson won the championship.

PSA, Opus

More S&M in the tax code on a Wreck-Free Sunday

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.

PSA, Opus

S&M and a fair(er) tax structure on a Wreck-Free Sunday

I know where some readers’ minds went with that headline, and you’re only partially right. The current tax structure is like a master/slave relationship gone toxic, rife with abuse. But the S’s and M’s in this discussion have only technical meaning, not that kind of meaning.

What I came up with is a tax structure based on making things vs. making money. I am of the opinion that making things contributes to the overall good of society, where (just) making money has come perilously close to destroying the economy at least twice in a century that is not quite 13 years old. I am basing part of my tax structure on the “Six Degrees of Kevin Bacon” game. People and businesses would be classified on a 6 step scale based on how far they were from a sellable product. S0 people and businesses would be the actual products themselves, people would pay to watch these people or companies working. Examples would be musicians, athletes, actors and actresses, performing artists of all stripes for the “people” side of the formula, and the venues they perform in for the companies side. Texas Stadium and Charlotte Motor Speedway would be examples of S0 companies. At the other end of the scale you would have S5 people and companies that exist only to make money by moving money around, like your typical Wall Street bank CEO and the banks they run.

The M in this case stands for Minimum wage and multiples thereof. This would be used to determine tax brackets in the various categories, with M1 being a person making minimum wage 40 hours a week and never getting a week off, roughly $15k at today’s minimum wage. The top tax bracket is M250, the person in this bracket makes as much in a single day as someone on minimum wage makes in an entire year. Depending on your S classification the marginal tax rate at this level would be anywhere from 50% to 99% when all the taxes are added together. Currently people in the M1 bracket pay 15.3% with no deductions in the form of SS and Medicare taxes, and I don’t see that changing either. If the Social Security tax goes up the income tax would decline the same amount, and not just at this level but all tax brackets.

Now how this would work in the real world is where the going gets squidgey. At the ends it’s quite simple, S0 and S5 persons and companies are easy to figure out. It’s the S3 and S4 companies that are difficult to classify. S1 are people and companies that make actual physical products, the kind that take lots of investments of capital to create the workspace and education and effort on the part of the worker to create the product. Engineers and designers and assembly line workers are S1 people, and I think it’s pretty obvious what the S1 companies are, the Fords, Trek Bicycles, any farm, any restaurant, any grocery store… S2 companies would be the transportation companies, trucking and shipping firms. They can have S1 employees like truck drivers and loaders and longshoremen, but the company is still 2 degrees removed from the actual product. Still vital to the economy, but not actually making things so taxed slightly higher than the people that make things. It all works out in the end as other taxes on companies like this would be reduced because the income taxes would be covering their external costs better. S2 people would be managers and supervisors, people not actually on the line but who interact with the people on the line. S3 people are the supervisors and managers of the people that supervise and manage the people on the line that actually make the products. As the distance between the product and the person grows, so do their taxes. It’s the current money-making champs that have me confuzzled, the mining and extraction companies. These companies make huge financial gambles on if the stuff they are looking for is at the location they are looking in. But at the same time these efforts have high external costs that are not currently being borne by the companies but rather are forced upon the people that live nearby or in some cases get their water from the area being mined. These companies would be in the S3 and S4 status. They don’t actually “make” the product, but they aren’t that far removed from the product. And I guess the refining process would have to be classified as S1, but with the external costs assessed at the extraction point of the raw materials. Moving on recyclers and waste collectors and processors would also be S1, dealing directly with the product but on the other end of the life cycle. Recycling and waste processing are messy but necessary parts of the economy, and as bad as they are things would be much worse without them. Think ecology, without carrion eaters of all sizes we would be up to our butts (and beyond) in deceased critters. Recyclers and waste processors do the same thing for the economy. Retailers would also be an S1 classification with most of the supply chain being S2. They don’t make it or sell it they just move it and store it between the makers and the sellers.

And most if not all upper management of any company would be the S5 workers for the company, people 5 or more levels removed from the actual product design or manufacture. The decider would be time making vs time telling people what to make and deciding where to make it, if you spend more than 50% of your time at work actually making things then you would be S1, so line supervisors who actually run machines as well as do work schedules and deploy workers to their work stations would be S1, but line supervisors that just walk up and down the line rarely if ever touching the product or the machines that make the product would be S2, and the supervisor for either one would be S3 as there would be two people between him and the product. Again the squidgey part is the person at the bottom of an S5 company, as they don’t have an actual product but don’t supervise anyone either. Just on General Principle I would say anyone at an S5 corporation is an S5 worker, to discourage people from wanting to work in S5 corporations.

And that’s how things would be if I was running this popsicle stand.

PSA, Opus