All good points. To clarify, 50% is the marginal tax rate from the OP's system alone. A major reason that effective marginal tax rates can be so high is that programs like (to be US centric) food stamps and Medicaid are means tested, so they phase out or go away entirely as you make more income. If the OP's system would retain those kinds of programs, their contribution to the marginal tax rate would come on top of the 50% cited above.The net effect of enacting this system would depend on which parts of the current bundle of social insurance programs it would displace (in the US, presumably the EITC and TANF, at least).