Quote from misterno:
In most developing and underdeveloped countries the government knows it can not collect taxes from rich people because there is no social security number nor a away of tracking income. So they rely solely on the VAT.
I have seen it and believe me it is the WORST tax system ever. Rich people pay alittle more tax because they spend more but their income is 100 times the little guy. Since the non taxed income grows much faster than the taxed, as a result you have the super rich and the super poor.
IRS tax codes are as far as I read and understand far more advanced than what VAT can do. It has its problems and may be complicated but it does a super job in transferring wealth from rich to poor. That is the ONLY reason why USA does not have poverty like in 3rd world countries.
When I say poverty I mean real poverty, not the drug addicts and the alcoholics wandering in downtowns. They can find a minimum wage job and pay literally no taxes but they don't. Not because they can not find a job but because they prefer not to work.
That is why USA does not have poverty like in the 3rd world countries. The tax system works perfectly. I would say apply %50 tax to any income above $500K. What is a guy gonna do with all that money other than spending on luxury useless waste? And on the other hand we have millions dying from poverty.
Apply %50 tax to any income above $500K but in the meantime encourage investments in technology with even bigger subsidies and tax credits.