The Tax Code and Algebraic Functions

Currently, taxes and income redistribution are often based on income cut-offs. When graphed, it looks like discontinuous stair steps. If you make under some amount, you qualify for all benefits. If you make under another you get some smaller block of benefits. Then, it starts working in the other direction. If you make x amount you pay this % in taxes. If you make y amount you pay a dramatically higher % in taxes. In other words, if you made $174,400 in 2011, then you pay 28% ($48,832). But, if you make $174,401 you pay 33% ($57,552) Although the second instance made only $1 more in income, they paid 5% more of their income in taxes. Ouch! This occurs in all 6 income tax levels and with government funded social programs and benefits. The IRS calls this broken system tax brackets.

The problem is that this primitive approach often gives incentives for people to work less or not at all. This is the case because most of the time, people's income lies in the space between the steps. For many, if they work they are not eligible for food stamps, healthcare, grants, etc, by just a bit. But, if they were to work less or not at all they are eligible for more benefits than they could afford with hard work. For others, they will lose thousands of dollars to taxes if they work too much or too well.

My question is why don't we use algebraic curve functions in our tax codes to eliminate this rather arbitrary and unfair stair step system? Rather than having tax brackets have a tax function. What if you plugged in your income for x and out pops your total benefits or taxes for y (rounded to the nearest cent of course)? It would not decrease revenue, would be just as easy to administer, and is much more just.

As I recognize that there may be some degree of luck in a person's prosperity, I am fine with a slightly curving function that takes into account that good fortune and is progressive to a degree. But, as accounting for "luck" is clearly an inexact science, the curve should be rather conservative. Better to err on the side of too little redistribution than too much. It is better to let fate distribute prosperity in mysterious ways than to allow government to redistribute wealth by force and without reliable indication that the redistribution is fairer in the first place, meets its stated goals, or are morally justified. The left sometimes depicts poverty and affluence as a byproduct of power. However, studies show that income-level is most highly correlated not with "power" or social class, but long-term efficiency.

On a side note, Benjamin Franklin asserted, "It would be thought a hard government, that should tax its people one-tenth part of their time, to be employed in its service." I don't know if that is the right cut off or not (10%); but, surely, current taxes are far too high. Nearly half of Americans don't pay a dime. But only less than 20% of Americans are below the poverty line, which, given the benefits they receive, is a much higher standard of living than most Americans think.

It shouldn't be about who shoulders the tax burden; there shouldn't be a burden to shoulder. Cut bureaucracy. Streamline government. Government must stick to its original charter to protect essential rights, obligations, and property, not to furnish us with comforts and entitlements lulling us into a soft despotism and dulling our aspirations. We need fewer paternalistic government programs and more personal responsibility. Sometimes, we have to work at a job we don't prefer. Sometimes, we have to live in a place we don't prefer. Sometimes, we have to live on a tight budget. The government shouldn't use my hard-earned tax money to let others avoid those sacrifices when I had to wade through such trials myself!