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Let's forget the realistic implementations of such a proposal and assume there's a 100% fool-proof way to verify how many hours of work you performed each week of the year (even for entrepreneurs.)
Under this plan, your tax rate will have nothing to do with how much money you make a year. Instead, it's inversely correlated with the # of hours you work a week (on average). Let's also exclude the retired and the disabled from this. Let's use the following as an example (the actual #'s can be adjusted):
You work 100+ hours a week: Your tax rate is 5% whether you make minimum wage or millions a year.
80 - 100 hours: 7%
60 - 80 hours: 10%
45 - 60 hours: 20%
35 - 45 hours: 30%
20 - 35 hours: 40%
under 20 hours: 50%
The tax rate could also be a continuous instead of a discrete function so that increasing your hours worked from 34 to 35 won't immediately knock down your tax rate from 40% to 30%.
Note: volunteering hours also count. For someone who has retired early at age 40 making 1 million a year on investments, if that person volunteers 50 hours a week, their tax rate will only be 20% vs. paying 50% if they just sat around.
Generally, the more you work, the more money you make so even if your tax rate is lowered from working long hours, the government won't necessarily see a reduction of tax revenues. Also, salaried employees working a ton of unpaid overtime will receive a "bonus" in the form of lower tax rates.
Note: Even though I'd love to be taxed at a lower rate for working longer hours, I'm not seriously considering proposing this idea to be put into practice. Just want to see the economic ramifications and how others would perceive such a tax schedule that's radically different from what has been what has already been tried.
I do understand what you're getting at... but the sheer logistics of finding a system to handle that would be nearly impossible.
For instance, I log my own time on an electronic timecard which I send to my boss. He truly has no idea how much time I do or don't work... so he "trusts" me to sign it.
But take someone who says "hey, I'm going home... punch me out in about 3 hours, okay?" How could that be monitored?
Or, those at the top of the food chain (for whatever type of business)... who's going to question them on their time? So, we'd have the top dogs (and generally those making the most money) "coincidentally" working the most hours.
And what is "work"? I leave my workspace, go home and work on a problem on my own initiative. Is that time counted?
I'm not trying to punch holes in your idea for the sake of doing so. But even if something like that could be passed, I can't imagine what oversight would be needed for something like that (and the rules and regulations for what constitutes "work"), etc. And I sure don't trust people to tell the truth about that as a whole if they know their pay is on the line.
Good concept... I really do understand what you're trying to get across. It's just too bad it would nearly impossible to implement.
Temporary agencies are the only jobs in some areas of our country. Many employers love to work employees just long enough to get the job done and not long enough to justify putting the employee on full time with benefits.
The reality of your tax system would be that you would place the greatest burden on the poor working class.
This would really suck for people with kids. (Note, I am single with no kids, so I am not writing this because of how it would affect me personally.) If they want to spend any time at all together as a family, they likely won't work more than 45 hours a week, which would give them a 30% tax rate. And if a spouse (either one) wants to get a part-time job to help pay the bills, at a 50% tax rate it wouldn't be worth it. What kind of sense does that make? (And does women's unpaid work in the home now count?)
OP, if the point is to tax at the lowest rate those who EARN BY WORKING, then inheritance taxes (which Republicans call the "death tax") should be raised. After all, if we value paid work so much and want to be CONSISTENT about it, then why should people be able to inherit big bucks and not work? (Note, I am just pointing out an inconsistency in what we say we value and what our taxes are. No attacks please!)
Totally aside from the practical difficulties of implementation, I find the OP's proposal completely irrational. It penalizes people who work part-time. What is the sense of that? Some people may want to work full-time and are struggling to exist on their part-time work while looking for a full-time job. So you hit those people with a higher rate? The case of mothers with children has already been cited. And how about college students who need part-time work? I just don't see any advantages to penalizing part-time work. Can the OP state his point?
Totally aside from the practical difficulties of implementation, I find the OP's proposal completely irrational. It penalizes people who work part-time. What is the sense of that? Some people may want to work full-time and are struggling to exist on their part-time work while looking for a full-time job. So you hit those people with a higher rate? The case of mothers with children has already been cited. And how about college students who need part-time work? I just don't see any advantages to penalizing part-time work. Can the OP state his point?
The more you work, the lower your tax rate.. that's the simple principle.
I'm looking for your opinions on this principle first, and if it makes it past that test THEN we'll deal with the practicalities and difficulties of actually implementing it later.
If needed, mothers, students, etc. could get "work hour credits" to move them to a lower tax rate bracket, just as disabled and retired people are exempt from being taxed at high rates due to them working little/no hours (like I stated.) There's no point in penalizing them when they have significant barriers to working more. The unemployed and temporary workers who cannot find more work but have the time to work more can do volunteer work to lower their tax rates.
People would just inflate the number of hours they worked if they are contractors paid by the project, or salaried employees. What would stop a wealthy, salaried employee who gets to work from home from claiming extra hours of work? The company wouldn't care since the person still gets paid the same. Also, athletes would pay almost nothing in taxes even if they earned millions of dollars because they travel so much (think about the hours).
People paid by the hour who are not allowed to work overtime would have to find extra jobs.
I'm still for a flat tax for everyone.. the same rate whether you work or not; are rich or poor..
I agree.
There would be ZERO way to prove how much someone worked.
And then you would have to define 'work.' Is work 'thinking' about the product? Planning? Actually being out there on foot?
I agree, too. EVERYONE should pay something....but dollar for dollar, the ratio of tax should be the same for everyone.
OR....get ride of "income tax" all together and institute a National Sales Tax....NOT a "VAT"! You only pay tax if you buy something! Those with lots of money will be buying more expensive stuff (generally speaking), so they would naturally pay more. But, all the other IRS taxes would have to be canned.....can't add more tax on top of what we already pay.
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