I am not an accountant so forgive me if I make some errors in my reasoning, but I think I may have discovered a breakthrough that will make tax liability distributions much fairer. The way I understand things, taxes are set up so that the poor don’t pay anything, the middle class pay some (depending on where in the middle class they fall and how many deductions they can claim), and the wealthy pay a lot (an awful lot). I’m not saying that the system isn’t fair. I do believe that those who can afford to shoulder more of the burden should. But I also think we can make the system much more equitable.
In the United States, the “wealthy” tax bracket is defined by an annual household income of $250,000 or more. That might sound like a lot of money but honestly, it depends. One of the main things it depends on is cost of living. If you make enough income to qualify for the highest tax bracket about 35% of your salary will go to taxes. So now your $250,000 worth of income is more like $160,000. You might be thinking that $160,000 is still a lot and I wouldn’t disagree entirely. Even after the really high tax rate you are left with more than enough to live on no matter what your circumstances. If you are not able to make ends meet with that amount of money then you are doing something seriously wrong. But whether or not you’re living the life fantastic on your $160,000 is another matter. Depending on where you live that amount of money could translate into a ten bedroom mansion or a two-bedroom condo; regular dinners at the nicest establishment in town or dinners at IHOP (no offense meant if IHOP is in fact the nicest establishment you have in your town). The point is that cost of living is a big factor in defining wealth, yet it is not a factor used in determining tax brackets…until now.
Income tax brackets must now factor in the cost of living in the area in which that income was earned.
Under this new income tax system, the wealthy tax bracket in an area like New York City or San Francisco will start much higher than in areas with lower cost of living. You already pay less taxes if you are supporting dependents, paying mortgage interest, paying college tuition, have very large medical bills or other factors that make your net income far less than your gross income. This “sliding tax bracket” system is just an extension of this philosophy.
As always I remain your all-powerful and benevolent Queen of the World,
Marisa
How about a tax exemption for say People who work in NYC at McDonalds and make less than $30K a year.
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