Your other complaints I don’t really buy. Yeah, it’d be better if your tax bracket was determined by a rolling average of the last five years or something like that, but for simplicity we don’t do it. Small businesses don’t have profits that oscillate by millions of dollars year to year. (Those with oscillations that big aren’t small by any normal definition.)

Also, how on earth would this hurt the middle class? Sure, they can’t hire the expensive accountant to minimize what they pay perfectly, but it doesn’t matter because the tax doesn’t apply to them.

Do you support progressive taxation in general?

Sales taxes are not nearly as great as you think, but it’s too complicated an issue to get into here. Maybe I’ll write a post on it soon.

What I think would happen if this were implemented:
- The salaries & bonuses this is meant to address will simply be converted to perks of some kind that are not taxable.

- The tax laws would not be able to discriminate between the bloated salary of a wall street executive and the small business owner who does well one year out of five.
- The middle class will again take the hit when they do not have the resources to “work the system” and take advantage of the loopholes.

I fail to see the fairness in forcing someone to bear more of the burden simply because they can (assuming all who qualify can). Regarding salary caps, I agree completely with your points and it is certainly not the government’s business to dictate salaries except where the company is using government funds to pay them. However, the TARP money is not “normal business”, so I hope that rules in place for it do not set precedents.

“Of course, if all those salaries were capped, social expectations would change, and this isn’t the real problem.”

I don’t think I agree with you here. I think that culture is the problem. I cannot fathom why top execs of failing companies are paid bonuses for their failures; every company that I worked for in my past career (I’m in academics now) only gave bonuses for success. Yet now it seems to be expected as part of their base salary rather than performance-based and anyone who knowingly invests in a company with these policies accepts them.

I think there is a fair way to distribute the tax burden that ensures that virtually nobody “feels the pain” disproportionately: sales tax.

Similar to the “luxury tax”, the more expensive an item, the higher the percentage of sales tax. Currently, we have no federal sales tax, so this is an untapped resource.

What about a flat “fee” on items over a specific dollar amount, say $1K? They could exclude cars & homes & perhaps a few other things. Even a 5$ per item “surcharge” would generate quite a bit of income.

The added bonus of taxing higher priced items is that the additional cost would be negligible.

Just some thoughts…