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Please try to sway me from the idea of running a flat 7% across the board. The way I see it, if this were implemented we would start pulling out of debt slowley but surely.
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You ever hear of the Marginal Propensity to Save? Basically, the cost of living is (X) and income is (Y). (X) is constant, and the greater (Y) gets above (X), the lower % of income is spent.
So, someone making - say - $30k a year spends more of their income than someone making $250k a year, meaning Joe $30k is more stimulative for the economy. So, logically, taking 7% from Joe $30k has a starker economic impact than taking 14% from Mr. $250k.
While there are many problem with America's tax code, the "income tax" in the contemporary USA has devolved into, largely, a tax on working. It doesn't make sense to tax inheritance less than a paycheck, or dividends (for non-retirees).
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So what's the incentive to be socially mobile?? Make more money so you can lose welfare assistance. Does anyone else see the problem here?
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It is problematic, but you're forgetting that "Temporary Assistance for Needy Families" (TANF, the program you mistakingly call 'welfare'), is not unlimited and has conditions that must be met for it to be dispensed. Welfare Reform under Clinton ensured that nobody can recieve Federal funds, from this program, indefinetely.
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Problem is, the sneaky ****s at the top know how to cheat the system. In fact, that's why our economy crashed in the first place.
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You're saying that the economic crisis was a result of the wealthy avoiding taxes, not a gigantic credit bubble which was international in scope?
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That, and also the fact that American banks are not regulated by the government, so they can do whatever the hell they want when it comes to mortgage rates and investments. Also, the Federal Reserve is separate from the government, almost like a third-party actor, and it doesn't help that interest rates are determined by a non-governmental institution.
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1) Banks are regulated by the Federal Government, as well as State Governments. This is why smart shoppers take note of what State their bank calls home.
2) It's a good thing the Federal Reserve is not polititicized, otherwsie we'd have interest rates manipulated by politicians for crass, short term political gain. The last thing we'd want to do is subject monetary policy to the horrors of the election cycle.