Everything you ever wanted to know about progressive tax rates (but were afraid to ask)...

Okay, I know I'm not the nation's foremost authority on tax rates or really any kind of authority at all, but there are a few misconceptions about progressive tax rates that hopefully I can clear up.

First of all, what do I mean by a "progressive tax"?

A progressive tax is a system of taxation in which taxes are assessed at a higher rate as an individual's ability to pay taxes increases (i.e., the wealthier you are, the more you pay).

Sounds simple, right?

Well, yeah, it kind of is, but a common misconception is that it's applied based on a percentage of your total income. In other words, if you make $30,000 you pay 10% and if you make $100,000 you pay 50%, etc. Obviously, this would be stupid. Let's say you taxed people at 30% of their income if they made under $50,000, but you increased their rate to 50% if they made over $50,000. A person who made $50,000 would end up with $35,000 after taxes, and a person who made $60,000 would end up with $30,000. This would be totally retarded, and no one is advocating this.

In contrast, if we applied a real progressive tax rate, your income would be taxed at different rates according to how much of your income falls into certain tax brackets. For example, if you made $30,000, you would be taxed at 10% on $30,000. If you made $50,000, you would be taxed at 10% on $30,000 and 15% on the remaining $20,000. If you made $100,000, you would be taxed at 10% on $30,000, 15% on $20,000, and 20% on the remaining $50,000. Your effective tax rate (and by that I mean the percentage of your income that you pay in taxes) would gradually increase, but it wouldn't be based on your total income.

An alternative to the progressive tax--one that conservatives often advocate--is to tax everyone at the same percentage rate. For example, we could tax everyone at 30% so that if you made $30,000 then you would pay $9,000, and if you made $100,000 then you would pay $30,000, etc. Although this sounds fair at first, the problem is that $9,000 means a lot more to someone making $30,000 than $30,000 means to someone making $100,000. For example, if you made $30,000 then you'd have only $21,000 after taxes, which isn't a lot of money when you add up rent, food, electricity, etc. That extra $9,000 could make the difference between having medical coverage for your children or worrying about whether you can afford to eat by the end of the week. In contrast, if you made $100,000, you'd have $70,000 after taxes. You probably wouldn't be happy to have to pay so much (I know, I wouldn't), but in general, you could afford all of the basic necessities, plus put some extra money in the bank, buy a car, save up for a house, and send your offspring to a decent college.

So here's the problem:

A lot of people in our country right now think that the scenario I just mentioned is fair. The only difference is that they recognize that because 30% is excessive for someone making $30,000, they think we should lower everyone's percentage rate so that instead of paying 30% of your income, we make it 20% or even 10% or whatever we feel is "fair" for everyone. At first, this might seem like a good idea. Hell, if I don't think about it too much, I'm all for it! Pay 10% of my total income? That would be awesome! The problem is, at a certain point it turns out we can't afford things like, oh, I don't know, making sure our bridges don't collapse, our grandmothers aren't begging in the streets, and our houses don't burn to the ground. (Not to mention, we really can't afford to bomb other countries into oblivion, but I suppose that's another issue...)

In the end, if we care about making life tolerable for everyone (and for the sake of our humanity, I hope we do), a progressive tax rate would ensure that the people at the bottom of the pyramid can survive and the people at the top of the pyramid pay enough so that our roads don't fall into disrepair and our water isn't toxic. I mean, hey, maybe I'm alone here, but wouldn't it be nice to maintain clean air standards and oh, I don't know, make sure there's some kind of oversight for things like pipeline safety?

In the end, at the risk of sounding preachy, the fact is that not everyone goes to college and lands a high paying job--and nor should they. It takes all kinds of people to form a society, so why should we begrudge people for choosing different paths? We need people to make things and provide services to keep our society afloat, and these services should be valued. Not all services necessitate huge wages (there's a trade off, after all), but it doesn't mean we should spit on people because they don't make a bazillion dollars. I hope we can all agree that everyone deserves dignity, no matter what they do. The sooner we quit demonizing people who rely on social services and start progressively taxing the very, very wealthy people who can afford to pay for this stuff, the sooner we'll ALL enjoy a better quality of life.

And oh yeah, if you think your own fate isn't wrapped up in the fate of all of the other people in our society, then sorry, but think again. Poverty and desperation breed higher crime rates and larger slums, and these things affect EVERYONE...unless you can afford to live in a gated community. Can you?