Tuesday, October 25, 2005

The Correct Income Tax Scheme

     Where e refers to the mathematical constant e, f refers to a flat rate, applied at all income rates, p refers to the maximum rate for infinite income (not including the flat portion, of course), i equals income, pr equals the poverty rate, and c is a constant.

     Rate = f + p(1 - e^(-(i-pr) * c)

     I would suggest f should be 3 (varying between 1 and 5), p should be 55, but must be greater than 50, and I have no idea what c should be yet.

     Why tax people who earn less than the povery rate?  The libertarians are basically right about the idea that if you don't pay anything, you won't care how it is spent.  c should be crafted so that the logarithmic portion of the rate exceeds 50% at some defined point, perhaps 1,000,000,000 dollars.

     Below the poverty rate, simply discard the non flat tax portion of the system.

     This is the rate for any income, not the overall rate, which would probably be the integral of this, if someone jogged my memory correctly.

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