This would also require some amount of decreased taxes on the next quintile in order to avoid high marginal tax rates, i.e., if you suddenly start paying $2000/year in taxes as soon as your income goes from $19,000/year to $20,000/year then that was a 200% tax rate on that particular extra $1000 earned
Am I misreading this part? As in the UK the tax-rates are done on % of your income in a certain bracket, so you pay nothing on the first £15k, then 20% on £15-30k (I forget the exact brackets) then 30% on £30-45k and 40% on everything above that.
So if you were earning £19k a year for example you would pay nothing on the first £15k, then 20% of the £4k you earned that sits in the higher bracket. So you don't suddenly pay loads of tax as it only affects the income that sits in the taxed brackets so if you earned £35k you would pay (0*15)+(0.2*15)+(0.3*5)=4.5k in tax and so you avoid having any massive discrete leaps.
I thought that's how all progressive taxation systems worked as otherwise people could be better off refusing to take raises etc. and I'm almost certain that isn't the case anywhere in the world.
Am I misreading this part? As in the UK the tax-rates are done on % of your income in a certain bracket, so you pay nothing on the first £15k, then 20% on £15-30k (I forget the exact brackets) then 30% on £30-45k and 40% on everything above that.
So if you were earning £19k a year for example you would pay nothing on the first £15k, then 20% of the £4k you earned that sits in the higher bracket. So you don't suddenly pay loads of tax as it only affects the income that sits in the taxed brackets so if you earned £35k you would pay (0*15)+(0.2*15)+(0.3*5)=4.5k in tax and so you avoid having any massive discrete leaps.
I thought that's how all progressive taxation systems worked as otherwise people could be better off refusing to take raises etc. and I'm almost certain that isn't the case anywhere in the world.