May I Suggest a New Tax Plan?

 What if rather than focusing on more or less taxation overall in our U.S economy, instead we have an alternative tax plan with a bit of both?….

 

As I have mentioned in one of my previous articles, there are many problems with our current United States economy. That article also mentioned how our economy may not be heading in the best direction, in the near and distant future. I mentioned all the problems, ranging from the massive inequality, to the corruption and greed going on, as well as an assortment of other problems, other than a few positives like a long-term upwards trend on standard of living. I believe that a major potential fix for our economy could potentially be an alternative tax system, unlike the majority of tax plans of many other countries throughout the world.
I think both Conservatives and Liberals alike can agree that Republicans overall want a decrease in taxation, and Democrats want an overall increase in taxation on everyone. That is a major problem. Both have pro’s and con’s, but it shouldn’t just be fully one or the other.
With a decrease in taxes, though you could potentially get more consumerism, and (with assuming a decrease on everyone’s taxes including the middle class), you could get a middle class that could potentially be able to save more, send their kids to college, etc. On the other hand, the government would have less money to spend that would benefit different groups of people such as the middle class and poor with welfare, public assistance, cheaper tuition, etc. In the United States, the percentage of the GDP being from the government is already very low compared to other countries, particularly in Europe.

Now with an overall in increase in taxes, you could in return have a bigger government that could make our society better with infrastructure and better education, and many other things. It could even involve paying off more of the national debt. Also, a higher taxation on the wealthy could really help redistribute the wealth and fix the major problem of inequality. However, the downside is this could hurt some of those with lower to middle incomes, considering many are already just breaking even, and don’t have much money to consume. Though many could potentially get this back with a variety of government programs, whats the point if its already taken from their own paychecks? Also think of the costs of transitioning the money from those people to the government and back into government services.

What if rather than having a tax plan that heavily taxes more or less on everyone in general, we have one that is rather, really progressive, but with big cuts to taxes with the middle class, and virtually no taxes for the poor (or at least very little.)

In simple terms…. this would be something like a huge decrease in taxes for those in the lower income quartile. A good decrease for the middle class in taxes, as well as more tax deductions in general. Then about the same taxes for the upper-middle incomers. Finally, a big increase for upper-incomers, and a super tax increase for the super wealthy.

So why have a taxation plan so progressive yet with so much cuts for a good amount of the population? Well the top 1 percent of our countries wealth, as well as the top 5% own a tremendous portion of the country’s wealth. Basically, as you get to a higher and higher percentile in income, you end up owning more and more of a stake in the wealth distribution. If we focus just on taxing mostly from the wealthy, you may possibly end up with more taxes than before, despite big taxes from everyone else, this is simply because the small percentage of the population that holds the majority of the wealth, holds such a large amount of money that can be taxed and more evenly distributed! The tax cuts from the middle class and poor can be beneficial on the other hand to the wealthy, because of the more consumerism that will result in them being better off. This will really help more spending in our economy and better profits for businesses, which results in more money for the wealthy in a sense. Think of rather than a ‘trickledown theory’ a ‘trickle up theory!’

Below is a rough idea of what I would believe to be a good alternative tax system, rather than just an increase or decrease in taxes overall! I call it the ‘Dwyer Ideal Tax Bracket’, named after me. (Something to keep in mind though, this is what I think each incomer should be taxed at, at the end of the day, not at what each dollar at each income bracket should be taxed at, like in the actual tax plan. However I do believe it should continue to be taxed on per dollar, rather than instantly change on each income amount.)

Capture taxThis is certainly quite different then our current tax plan and many tax plans throughout the world, especially considering how progressive it is. Though this might sound like a good plan, it is yet another problem to close up the loopholes in the first place that many of the ultra-wealthy take advantage of! If you are interested in reading more about my idea’s behind this tax system, as well as other economic insights in general from a teenager, read more from my blog, or wait for the book that I am close to finish writing to come out. It is about growing our economy! Stay put!…

Maybe Happiness Doesn’t Just Peak at a Certain Income Level, But Rather This…

I believe something more in detail is left out, and should be considered on income verses happiness.

        

  As a teenager, I should have a broad look out on the rest of my life ahead and see what I can do to make the rest of my life happy and fulfilling. I want to make my happiness distributed out throughout my life, with a diverse portfolio of things that make me happy. Whether it be long term relationships, or a secure financial life, or even a successful career, whatever it takes to have a happy life. 

Positive psychology is a interesting topic, which is relatively new and is currently very popular. One thing in particular that I notice researchers are focusing on lately, is how much money does it take to be happy. The studies in general concludes that it peaks around a certain level, and after that it tends to stabilize and is not worthwhile to have a higher income. They often say arguably around 75k a year. Of course, you need the necessary tools for survival, and enough to have a life of flexibility and security, as well as a descent standard of living. On the other hand, you don’t need so much where its only buying you endless material possessions that won’t make you any happier, and only greedy. However, maybe it isn’t so simple.

Though I don’t have any data or studies to back my theory up, I do believe I have one that isn’t too frequently brought up in studies like these. I believe that more specifically, some parts of people’s budgets require higher amounts to reach that happiness peak, verses other parts not so much. For example, someone may only need to spend a little bit each year to reach their maximum amount of happiness in terms of transportation and a safe car, but things like education and health care you need a much higher amount to reach the maximum ROI with your happiness!   

You may say that each factor being spent on the income does add up to how much money you make, because each component of how the budget is broken down and how much you need for each amount to reach maximum happiness adds up to a certain income. (Though that might not be a bad way to study this topic and if you did want to find a simple income level…)  However, there are more external factors that may affect what level of happiness you reach with certain things, like a nice house or healthcare. I would believe this to most likely be location, specifically the economy and type of government you live in. 

Two good examples could be Norway verses the United States. In Norway, you won’t need to spend nearly as much in healthcare and education, since the government gives it to you. (Maybe some things left out in these studies is how much the government gives to their citizens, and how much money this is valued at.) However of course, in Norway housing in general is way more expensive, and you may need to spend a lot more of that aspect of your budget to reach the peak of happiness for that factor. In the U.S, you won’t get many generous benefits on health care and even welfare and public assistance for a safety net, but certain things may be cheaper such as housing, or goods at grocery stores such as food. Also, the taxes are very different in these two societies, and what is tax deductible as well, which could lead to the happiness level of certain factors in how your income is spent. These two examples hopefully paint a bigger picture in general on my theory. Different countries and economies may be a major aspect of my theory on individual factors that you spend on, require more money than other things to reach high happiness levels.

Remember my theory is just a theory, but I do hope that researchers on positive psychology and economists take this idea into consideration, that it’s not about how much you make per se, but rather the different parts of the income reaching different levels of happiness, whether it be transportation, housing, or even savings.