Wednesday, March 11, 2009
Top Tax Bracket
I've been advocating for something like this in Canada for years now. I think it's stupid that our top tax bracket starts at ~120k and goes up to infinity (check out this table of federal tax rates in Canada) (And here are the USA federal tax rates, for comparison). And the rate on that bracket is not all that high, at 29%. We should add another bracket at like 500k at say 32%, and another at 1 million at say 35%.
Actually, they sort of do this already in the US. You can see by looking at the tables I provided in the links that the US feds tax at 28% between 79k and 165k, which is likely roughly equivalent to our 120k+ bracket at 29%. Then they also add another bracket at 33% between 165k and 357k, and yet another at 35% above 357k. I like my numbers above better, but I think they're essentially going after the same idea (I came up with my numbers before looking up the US tax rates).
Does anyone else find it strange that (excluding state/county/provincial/municipal rates) federal taxes in the US are actually higher than they are in Canada, and that they define more tax brackets? Isn't the US supposed to be the land of the economic conservative?
Actually I've also been thinking lately of something more along the lines of a tax 'curve' than using specific brackets, but there's a host of problems with that. If it's linear (a straight line), you still end up with people who could outstrip the curve at some point, whereas if it's not linear, you end up taxing the highest earners so heavily they get nothing. A linear curve seems better to me, but I haven't convinced myself that a 'curve' system would be better than brackets, though I'm still convinced brackets are not serving us well at the momement.
