I think taxes should be based on a 5-year rolling average, to ease the burden for people who have high income only once in their life. Winning the lottery or patenting an invention that makes you rich is the American dream. Let’s tax high earners but show some lenience for folks who have a once in a lifetime windfall.
A rolling 5 year average would mean you’d be taxed overly heavily for years after a windfall.
Given that winning the lotto is often financially disasterous, getting taxed heavily after you’ve already blown the cash could cripple people at their weakest point. Making the lottery more appealing is also a net loss to society.
It opens another potential avenue for tax avoidance schemes to game.
Getting rich quick almost always requires doing something awful. If it just required hardwork or smarts, plenty people got that. We should absolutely not encourage people to aim for once in a lifetime “get rich quick” payoffs.
Doing the median instead of the mean would solve that problem. The post tax wouldn’t be as large then
You’d be in a lower tax bracket for the year that you won. If it bumped up your tax bracket the following few years, it would still be beneficial because you’d have saved a lot the first year. I don’t know though, this isn’t really an idea about finance or taxes, I just don’t think it’s right that someone who makes a million once gets taxed the same as someone who makes a million every year for 40 years.
They don’t get taxed the same. The person making that money for 40 years is paying 40 times as much.
still be beneficial because you’d have saved a lot the first year
You’d be taxed less when you already have a lot, but it’s common for people to blow a windfall and end up much worse off, so being taxed more heavily years later could be really devasting for many.
just don’t think it’s right
I can understand wanting to see some lucky shmuck maximize their winnings. But i think it would seem almost cruel to adjust for this one rare situation when so many more significant financial injustices exist.
I agree this is, and should be, an unpopular opinion.
If I get some money for doing nothing, a windfall, then getting half of it is still me getting free money.
If I work for ten years to get the same amount, shouldn’t I pay less in taxes? I spent my time and effort making that money.
Usually anyone who gets rich quick either ripped people off, inherited or won money and I would tax anything unearned at a higher rate than earned.
You’re comparing something different to what I am saying. In my scenario there is a guy who earns $1 million every year for 40 years and there is a guy who earns like $30,000 every year but in one year earns $1 million.
I’m not sure why you are comparing yourself to the guy who makes $1 mil every year, or why you think I’m saying that if you make $100,000 for ten years you should pay more taxes than if you make $1 million in one year. That’s not what I’m saying. I’m not advocating for all of us to carry the tax burden for someone who wins Powerball and takes home $50 mil.
Edit: if you support a wealth tax then you support the same thing I advocate for. With a wealth tax if you earn an extreme amount over your lifetime you pay more. With my opinion, it’s the same thing, but if you earn a moderate amount over your lifetime, you should pay less (even if most of your earnings occurred in one year)
Yes, let’s complicate taxes even more.
It shouldn’t matter how complicated they are because the government should just bill me.
They should know how much I owe and just tell me
Winning the lottery is not the American dream. Stop playing if you want to win.
Tax really isn’t the issue here, tax is only significant to you because of wage theft. If the rich weren’t hoarding wealth and people had adequate income, you would be earning a lot more and the tax you pay you’d care less about. Unless you’re one of them greedy treasure dragons
Lottery winnings in Canada are tax free. Only the earnings from investing it is taxed according to standard laws. It makes a lot of sense because the lottery itself is a form of taxation. The government already got their cut from the tickets purchased by everyone.
In the US you pay the players tax, then you get taxed on the winnings, then you get taxed on income earned from investments.
Meanwhile American billionaires pay next to nothing. What an uncivilized country.
The top end high earners will just restructure their pay so that they get paid a big bonus once a decade or longer.
Rich people already pay less tax (through shenanigans). The source of the wealth is irrelevant.
Top 1% in the US pays 40% of all income tax and top 10% pays 70% while the bottom 50% pays 3.3%
How much is that in percentages of their income, disregarding artificially deflated incomes of the rich?
Why do you think that matters more than how much they contribute?
Your question is tied to the idea that their contribution is only contrived of their income taxes, and ignores the fact that 2 people working the same hours contributing the same amount don’t receive the same income.
If you want equal contributions from all income taxes them you would have to have equal pay for all jobs.
“But my job contributes more to society”. No it doesn’t.
The doctor needs a roof just like the roofer needs a colonoscopy.
“But my job contributes more to society”. No it doesn’t.
It literally, mathematically, does if their wage is higher. Even if there were no tax progression, they pay more taxes, which the society uses.
The bottom 50% holds 2.3% of the wealth. So if your 3.3% is correct then that would say they are paying at least 43% to much.
We shouldn’t be taxing basic necessities, we should be taxing things that accrue wealth.
If someone owns a shabby house and their income only makes ends meet they should be paying nothing in taxes.
If you want those people to pay more taxes, the wealth needs to be spread to those groups so that wealth can be taxed.
Different argument. The implicit narrative here is that the rich don’t pay taxes when in reality they pay almost all the taxes. If you want them to pay even more then that’s fair but the reality is that most people don’t have the faintest clue what the actual numbers are to begin with.
