Probability, Paradox, and the Reasonable Person Principle

Post by JoachimSchipper » Sun, Jan 17, 2016, 8:51 AM UTC

tunesmith wrote: post #10

The thing about the value of money being roughly logarithmic sent me on a google exploration where I ended up on a suggested "logarithmic flat tax plan". The gist is, you figure out how many times the poverty rate you make, take the log-base-10, and multiple by some flat constant that is the same for everyone - the result would be your tax rate. Right now in the US that constant would be around 9, assuming the same t…

Post by [deleted] » Sun, Jan 17, 2016, 10:00 AM UTC

tunesmith wrote: post #12

JoachimSchipper wrote: post #11

Earlier quoted context omitted.

So Alice earning 10x poverty pays 9 (somethings), while Bob earning 100x poverty pays 18 (somethings)? Note that poor Carol earning 1x poverty pays nothing. I'd expect Alice to be rather unhappy with this system. (Also, if someone ever manages to earn 0 in a year, you'll have to give all of the world's wealth to him/her. ;-) )

Alice pays 9% of her $117k income. Bob pays 18% of his $234k income. Those are lower tax rates than the present, so not sure why Alice would be unhappy with it. Carol pays nothing. Floor is the poverty rate, so no one makes infinity.

Post by tunesmith » Mon, Jan 18, 2016, 5:50 AM UTC

njonsson wrote: post #14

tunesmith wrote: post #12

Earlier quoted context omitted.

Alice pays 9% of her $117k income. Bob pays 18% of his $234k income. Those are lower tax rates than the present, so not sure why Alice would be unhappy with it. Carol pays nothing. Floor is the poverty rate, so no one makes infinity.

Unless I’m mistaken, if Alice pays 9% of $117,000 (i.e., $10,530), then Bob pays 11.7% of $234,000 (i.e., $27,400). An 18% tax rate would apply to earners of $1,170,000 (i.e., $210,600 in tax). The high end would be a 63% tax rate applicable to earners of $117 billion (i.e., $73.71 billion in tax).