Why Should There Be One Tax Bracket In The US?

There is no such thing as a “universal bracket”, that is oxymoronic; according to Merriam-Webster a bracket is: definition #4—a section of a continuously numbered or graded series (such as age ranges or income levels). If something is universal, by definition it isn’t a bracket. America has a universal tax rate—it applies to everyone—it’s progressive, or maybe graduated is a better word; it has brackets within it, but everybody pays the same amount of income tax at the same levels of income. When your income passes a bracket threshold, only the amount earned above that threshold (and below the next), is taxed at a higher rate. The higher rate does not apply to the previously earned amounts; e.g. if we had a 70% top tax bracket at the $10 million dollar level, only the amount above $10 million would be taxed at 70%, not everything below that as well. Should America just have a “flat tax rate” is what I believe you meant to ask about; A flat tax would be one rate that applies to all levels of income from $10 to $10,000,000. No, I don’t think so, to quote a famous conservative (classical liberal) economist from the 1700’s Adam Smith: Book Five's principles require not simplistic proportionate taxation but progressive taxation. Smith stated "it is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion", because a tax on "the luxuries and vanities of life [which] occasion the principal expense of the rich... would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable." There are many modern conservative (neoliberal) economic think tanks that would like you to believe that Adam Smith’s work says other than it does; but it just doesn’t, his seminal work “The Wealth of Nations” was originally published in 1776. An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith. First published in 1776, the book offers one of the world's first collected descriptions of what builds nations' wealth, and is today a fundamental work in classical economics. By reflecting upon the economics at the beginning of the Industrial Revolution, the book touches upon such broad topics as the division of labour, productivity, and free markets.” Since the advent of our current experiment with neoliberal taxation policies—or modern conservatives misapplication of them to be precise; specifically Reaganomics (supply-side economics), we’ve seen lower economic growth and increasing income inequality. In 2007, the top 20% wealthiest possessed 80% of all financial assets. In 2007 the richest 1% of the American population owned 35% of the country's total wealth, and the next 19% owned 51%. Thus, the top 20% of Americans owned 86% of the country's wealth and the bottom 80% of the population owned 14%. In 2011, financial inequality was greater than inequality in total wealth, with the top 1% of the population owning 43%, the next 19% of Americans owning 50%, and the bottom 80% owning 7%. However, after the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 35% to 37%, and that owned by the top 20% of Americans grew from 86% to 88%. The Great Recession also caused a drop of 36% in median household wealth, but a drop of only 11% for the top 1%, further widening the gap between the top 1% and the bottom 99%. Flattening our graduated tax rate as we’ve done since 1981 has resulted in vast distortion of the Pareto Principle; the problem isn’t that 80% of the wealth is owned by 20% of the population, that’s exactly what Pareto observed in the 1600’s, the problem is that it’s become more concentrated than that. So, No, I think what you’re asking about is an even worse idea than the bad ideas we’re currently operating under; I think we should go back to a graduated tax rate more like we had during the “Golden Age of Capitalism” (the Post-WWII Economic Expansion). We would have higher GDP growth and economic gains would be spread across income brackets, even the rich would do better, it’s a win-win system instead of our current win-lose.

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