Tuesday, March 25, 2008

The Case for a Regressive Tax System: Let's Tax Income the Way We Score Bowling

Under the scoring rules of bowling, you get rewarded, not penalized, for being successful. If you get a spare, the scoring system rewards you by adding the pins from your next ball into the current frame, and if you get a strike you get rewarded by adding your next 2 balls into the current frame.

Under our progressive income tax system with 6 tax rates increasing from 10% to 35%, you get penalized, not rewarded, for being successful, productive and entrepreneurial, because the more you earn, the higher the tax rate you pay. The top marginal income tax rate has been as high as 91% in the 1950s and 1960s, and 70% in the 1970s (see this related CD post).

If we scored bowling the way we tax income, we would subtract, not add pins for a spare or strike, i.e. penalize successful bowling.

If we taxed income the way we score bowling, we would reward success by reducing the tax burden for the most productive workers, not increasing it.

(Recycled from a
CD post last year at this time, during tax season.)


At 3/25/2008 8:32 AM, Blogger Ironman said...

You know, you've just stumbled into Alex Tabarrok's economic stimulus plan (be sure to read the comments - they point to an upcoming feature elsewhere....)

At 3/25/2008 2:11 PM, Anonymous Anonymous said...

"...reward success by reducing the tax burden for the most productive workers, not increasing it."

Now define "productive."

At 3/25/2008 6:42 PM, Anonymous Anonymous said...

Screw them as long as the FED is hell bent on using the hidden tax of infaltion and detroying the purchsing power of the dollar, let them catch me I ain't paying.

At 3/25/2008 7:07 PM, Anonymous Anonymous said...

“A lot of people in America think there is a trust – that we take your money in payroll taxes and then we hold it for you, and then when you retire, we give it back to you….but that’s not the way it works. There is no trust fund – just IOUs.”

George W. Bush , University of West Virginia, April of 2005

At 3/25/2008 11:29 PM, Anonymous Anonymous said...

"I hear it's so tough back in the States you have to support the government and yourself on one income"

Torrid Zone with James Cagney


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