Suppose you’re $10,000 into the top tier, and the top tier is taxed at 91%. That means you have a choice.
You can take 9% of that money and use it for any personal purpose, such as padding your investment portfolio.
Or, you can take 100% of that money, and use it for a “business purpose”. Maybe you put that money toward the salary of your best worker. Maybe you give a bonus to your research team. The point is that you can find a way to get $10,000 of business value from that money, or you can get $900 of personal value from that money.
Maybe you decide to try to defraud the IRS and claim a personal expense as a business expense. You put it towards a new car, claiming you need something better to get you to business meetings. You buy a car with that money, and in doing so, you give the seller a paycheck. Your act of tax fraud still achieves the purpose of the punitive tax rate: putting that money into the pockets of workers.
Our current top tier tax rate is 37%. Now, you have the option of $10,000 of business value, or $6,300 of personal value. Put that $6300 into an index fund and it doesn’t go to workers. With this tax structure, of course worker wages are going to stagnate. They can’t see the “carrot” and there is no “stick” to incentivize business spending.
Suppose you’re $10,000 into the top tier, and the top tier is taxed at 91%. That means you have a choice.
You can take 9% of that money and use it for any personal purpose, such as padding your investment portfolio.
Or, you can take 100% of that money, and use it for a “business purpose”. Maybe you put that money toward the salary of your best worker. Maybe you give a bonus to your research team. The point is that you can find a way to get $10,000 of business value from that money, or you can get $900 of personal value from that money.
Maybe you decide to try to defraud the IRS and claim a personal expense as a business expense. You put it towards a new car, claiming you need something better to get you to business meetings. You buy a car with that money, and in doing so, you give the seller a paycheck. Your act of tax fraud still achieves the purpose of the punitive tax rate: putting that money into the pockets of workers.
Our current top tier tax rate is 37%. Now, you have the option of $10,000 of business value, or $6,300 of personal value. Put that $6300 into an index fund and it doesn’t go to workers. With this tax structure, of course worker wages are going to stagnate. They can’t see the “carrot” and there is no “stick” to incentivize business spending.