IMO, if there was the will to build a better system there would be a better system. There's a lot of edge-cases in space travel, or medicine, but there was will to put very smart people with very powerful computers to work on both of these, and now we have rockets that land on drone ships and medications that can control HIV.

> The biggest issue with any tax is the disproportionate impact on middle tier/s.

How do other countries do it? There's countries with a healthy middle class, why isn't the US's thriving like theirs?

Someone tricked you. The US has one of the richest middle classes in the world. A CEO being paid obscenely has absolutely no impact on the middle class, it just makes a nice boogeyman for politicians.

Except that envy is part of the human condition, and arguably, a key component of human progress. Left unchecked, though, envy can lead to social instability. See, e.g., Kahneman and Tversky's work about how people are willing to incur harm to themselves to punish what they perceive as unfairness (sorry, no time to get the cite). So arranging our societal structures to keep envy in check might be necessary, even if it means giving some high earners a haircut on their income.

Of course, by this metric the successful countries are all in Africa. It will be an interesting future.

When the English and the Germans came to North America and replaced the population there, was that a success for North America? If so, is it the kind of success you'd like to have someone else give to you?

The system in each country is very complex and it's hard to tell which parts make it work better and which parts make it worse than another. The effects are all related.

First of all, the middle class is not well defined in many of the popular articles. There can also be a significant difference between middle class defined by income vs. by self-identification. See Figure 1.1 in [oecd]. I'd start with the premise that the US is an outlier in many areas - tax system, health care, pensions, education... All of which dramatically changes how the middle class is able to structure its finances.

My guess is that many of the US citizens have higher disposable funds in absolute value than Europeans but it helps them mostly in international travel and when buying easily transportable goods. Not as much in day-to-day living.

I'll try to compare with my country (Central Europe, laws similar to Germany's but with slightly worse execution). There's a healthy middle class but according to studies, it's shrinking. It seems middle class is shrinking worldwide. Even the [oecd] study I link is named "Under Pressure: The Squeezed Middle Class". I think this feeling also led to the rise of populist governments in many of the European countries.

I'll give some facts first, then try to interpret them:

- Effective tax rate at ~50 - 60 % for employees, ~30 % for IT freelancers. I'm including mandatory social and health insurance.

- Median wage: $15,500/year, typical IT wage around me: $30 - $60,000/year.

- Supermarket cashier earns 85 % of median wage, public bus driver at around the median.

- Served restaurant lunch (just meal) costs ~$7, dinner ~$10.

- Appartments cost (capital city) at around $300/sq ft

- Most (78 % [wiki]) of people own their housing (vs. 65 % in USA).

- Mortgage rates are at 2.5 % APR, some going as low as 2 % APR (10 years fixed), inflation at similar levels (last year around 2.8 %).

- I know personally just two people who went to private universities (one because he liked the school, the other one because it was easier) and no one who went to private primary or high school. The public schools are generally free.

- My family's out of pocket medical expenses amounted to $ 500 last year, mostly over-the-counter medication for our two kids (common cold, cough, supplements, vaccinations...).

- In hospital, you can pay around ~$10/night for the privilege of a private room but there's usually a shortage of them. There wasn't a shortage 10 years ago. People just weren't used to paying in hospitals.

- The medical services are free. There was a HUGE political fight around paying $4 flat for emergency (out of working hours) doctor visits.

- Fuel is taxed at 30 % extra to VAT, there are similar extra taxes for tobacco and alcohol.

- When you buy a real estate, you're immediately taxed 4 % of the value.

- Only 20 % of people use credit cards. Most of the credit is mortgages (which were mostly profitable due to rising prices so far) or car leasing. Outside of these bigger tickets, most of the credit seekers are low income.

I feel I live in a safe environment, the public transport is well functioning and clean (daily user). You can screw up, not save for some time, get ill and you're still likely to recover financially even if you work for a median wage. You may not be able to buy housing if your parents can't help you.

But in general, I think the ability to experiment a bit and a general feel of stability allows for much more effective negotiations with employers, even for comparatively lower income people, driving minimal wages down. On the other hand, because so big share of the money goes through the government, there are many inefficiencies.

If I moved for example to the US, I might end up in higher percentile of earners and most probably I'd have more money to spend on international travel and electronics. On the other hand there are the costs of the move (family away, frequent travel across ocean) and it would be partly paid off by worse public services and higher risks if unemployed/ill.

[oecd]: https://www.oecd-ilibrary.org/sites/689afed1-en/1/2/1/index....

[wiki]: https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...

the rich can afford the accountants that can minimize their "income".

the low income should theoretically have fair low tax rates.

You're left with the middle ground where people earn enough to pay significant taxes, but not enough to afford gratuitous tax accountants.

Not helped by lobbying determined to make taxes intentionally difficult in the US.

But isn't the real issue that 1 person is making a thousand times what everyone else makes? And wouldn't it be truly absurd to expect those 99 to pay more instead of the 1%?

If that 1 person was producing all the food for the other 99, I wouldn't find that to be a problem at all.

Things grow exponentially fast as you reach the top. If you look at the Forbes 100, Jeff Bezos is worth about 2x number 5, 10x number 40. [1]

The net worth of the top 1% is 10 million. That's 10,000x less than Jeff Bezos. The percentile/wealth graph is an insane hockey stick.

I don't doubt the 1% pay a big chunk of the pie. I do wonder if it's an amount proportional to their wealth, but let's leave the millionaires aside. I wonder what part of that 37% the billionaires are paying, and if _that_ is a fair amount.

[1]: https://www.forbes.com/forbes-400/#7795b4417e2f [2]: https://www.forbes.com/sites/jackkelly/2019/10/22/the-number...

Federal income tax is based on income, not wealth. It's entirely possible (and happens all the time) that wealthy people have a bad year with their investments and lose money. They don't pay income taxes on losses.

You don't need to make much more than me for that to start become profitable - accountants, trust costs, etc eat up a relatively fixed amount of money. But once you exceed that cost then it's time to start shifting money around.

Not that this doesn't reduce the tax you pay on your income. it directly reduces your "income" itself.

They should be paying a higher amount based on the amount of money they earned.

We could debate if they should be making so much %wise of total income.

It varies year by year.

not only is it true, but most people don't pay income tax or pay very little.

the bottom 50% accounted for a measly 3% of all tax.

this is the same in the UK and other countries.

right now we use the top 1% as scapegoats for the borderline useless politicians.

Of course they do, that is a symptom of the problem. Take an absolute extreme of society: one person has all the wealth, and everyone else has nothing. Obviously, that one person will pay 100% of the taxes, and everyone else will pay 0%.

Today, we see a similar but less extreme situation. It's not intuitive at first glance, but think about it for a few seconds and it makes sense: if you want a more balanced distribution of tax burden across society, you need a more balanced distribution of wealth across society.

Accordingly, if you want the bottom 50% to pay more, you actually have to tax the rich more to reach a more equal distribution of wealth.

Then you don't have a society. You have one person who claims they have "money" while everyone else moves on with their lives.

Only if the only taxes are wealth taxes. You're in a discussion about income taxes.

wealth = income - consumption

In the U.S., we tax all three: general income tax, consumption tax (e.g., sales tax), and wealth tax (e.g., property tax). Taxing any one has an effect on the other, and a discussion about one is relevant to all others.

No, income - consumption is net increase in wealth. Those are all flows. Wealth is a stock. Wealth taxes are periodic taxes on the value of the stock, income taxes are taxes on the flow.

You're introducing periodicity, which I did not have in my simple model. Maybe a more complete model would be:

  Wealth_N = Sum {i=1 to N} ((Income_i - Consumption_i)*CapitalGrowth^(N-i))