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Originally Posted by somerfrost
A very complicated issue...what would a drastic increase in sales taxes do to the economy? It would encourage folks to spend less...good for the folks doing the saving but rough on employment I suspect...less stuff bought=fewer jobs. A graduated income tax seems the only fair way but it's complicated. If we do as suggested and not tax the first $25,000 would that be fair? Of course not cause if I make $25,000 a year living in rural America as a single person, I'm in a very different spot than if I make the same while living in NYC with a wife and four kids. I think the best answer is to increase the amount not taxed using a formula that takes into account cost of living and number of dependents...the key point being that the tax exempt figure must be higher! Say, the first $40,000 baseline. Then increase the % paid by the rich to a point where 90-95% is taken! That will never happen of course...but bottom line, there is a point where folks really don't need any more income! Bill Gates seems to be a nice guy...but he doesn't need $180 billion dollars or whatever! The little child going to bed hungry needs a little tiny piece of that pie a whole lot more!!
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Bill Gates would not have to pay much in taxes even if they did raise his tax rate to 95%. Most of his money is in stock. You don't have to pay any tax on that until you sell the stock. So even if his stock appreciates by $5 billion a year, he wouldn't have to pay any taxes on that until he sells the stock. He may never sell it. When he dies, he may actually leave the stock to charity. In that way, the charity would receive more money. Let's say he planned on leaving the money to charity. If he had $40 billion in stock and he sold the stock, he would have to pay $20 billion in taxes and the other $20 billion would go to charity. If he did not sell the stock, but gave the stock to the charity, then the charity would get the whole $40 billion.