Public policy explained through poker: Taxes
Imagine a poker game where the rake structure is so convoluted and complex that the Poker Room manager tells you not to worry about it, “the card-room will supply you with a professional who can determine precisely how much you owe”, for an additional fee of course!
Well, this isn’t too far from how the US tax system works (not that many other countries have simple tax systems themselves). In fact, the US tax system has a lot in common with the rake structure used at most online poker sites and in most casinos: the smaller the game you play the less you pay in rake, but in terms of the percentage you pay it is typically higher.
The people who really get punished by this system are the mid-stakes players (in the tax code the middle class) since they play at a high enough level that the rake is the same as their ultra-high-stakes brethren and is capped virtually every hand, so they wind up paying the same amount as the ultra-high-stakes players — The micro-stakes players simply don’t generate enough rake to be overly consequential.
This is why I favor a flat tax rate (or a two-level progressive tax system). Let everyone pay the same percentage regardless of what they earn, and regardless of where their income is generated from. Just like a Poker Room that takes a certain percentage from the pot at every table.
Taxes are basically the rake; the cost to simply sit in the game, or live in the US. If you want to live in the US you have to pay something for the privilege. Why not charge every person in America 10% (or 15% depending on how the numbers work out) on the first $50,000 they earn. Anything over $50,000 you pay 25% regardless of where the income came from.
It makes no sense to me that the government considers things like gambling winnings or the sale of personal items on eBay full-fledged income, but investments are taxed at a mere 15%. Isn’t income, income, regardless of how it was acquired? The same would hold true for inheritance money, 15% to the government for every dollar you inherit up to $50k, and $25% for every dollar over that. An heir or heiress won the genetic lottery; their “job” is to live off their family’s money.
And can we just drop all of the exemptions and loopholes that allow people to pay $0 or even receive money back. I think every American (outside of the super-rich) would find the idea of a transparent, fair, tax-code appealing, even if it means they might have to pay a little more themselves.
As a self-employed individual I’d much prefer knowing that I should set aside $.10-$.25 of every dollar I earn, instead of going to an accountant at the end of the year and playing Russian roulette: Am I getting money back? Do I owe a little? Do I owe an amount equivalent to a compact car?
