I am curious what the chart looks like if we extend it beyond the $500k mark though. I suspect we start looking at a dramatic drop off the closer we get to the edge of the page. I remember hearing Warren Buffett saying that he pays much lower taxes as a percentage of actual income than his secretary.

BS study. After Kotlikoff's recent rant on how the US is insolvent I doubt his methodology is realistic.

I think taxes are more regressive than his study suggests..

Personally, I'm not sure the study includes investment deductions.

I did read the article, but I may have missed that.

But capital gains are money you already got taxed on when you earned it! They're double-taxing you! And if it's money that's re-reinvested, they're triple-taxing you! and if it's re-re-reinvested, they're QUADRUPLE taxing you!

The government can tax you to INFINITY!

Wait, I thought a capital gains tax was an annual tax on money you gained from investments? As in, you sell stocks and reinvest that money, you are taxed on the gains from the stock sales and any dividends you also receive during the year.

Since my only investments are in my 401k, I admit to not really knowing the capital gains stuff since it doesn't affect my life directly.

In Buffett's case, it gets even better. If I were him, I'd have my assets structured so that I received tons of dividend income and nothing else. Guess what the current tax rate on dividend income is this year if you have no other income (they are fixing this next year)?

Zero.

While we tend to be taxed around 40%, that is no 40% flat tax. Flat taxes either burden me when I receive the money or push that burden to when I spend the money. Either way, one way I am "safe" from taxes if I decide to save or spend money. As it stands right now, earning more, to a point, becomes self defeating, where as spending always has the similar tax burden. And investing has various burdens associated with it. A simpler tax is easier to predict and spend/save/plan around.

I'd rather they just tax me at 40% when I get my paycheck, then not tax me again if I decide to spend, save, or invest that money. Right now it's just a mess of potholes.

Or, it could be good. All the money being spent on paying people to crunch numbers might be spent in a way that, I don't know, MAKES A TANGIBLE ITEM.

Sure. Of course, you've got that pesky reality thing going against you. Not like a million suit and tie accountants are suddenly going to show up at the iron plant toting lunch boxes the day after the flat tax is implemented.

Again, I'm not saying that a hopelessly fubar'd tax system should be kept in place simply to support the people that make their living off of the hopelessly fubar'd tax system. I'm just pointing out the tax system doesn't exist in a vacuum. If letting obviously badly managed banks and auto makers fail was a bad idea because of the massive unemployment it would create, a wholesale rapid elimination of the tax bureaucracy must be a bad idea for the same reason.

Yeah, that's another good point. Regardless of whether a flat tax would be a good idea or not, practically I just don't think there's any chance we'd ever make a switch to one.

Well a true flat tax would get rid of progressive taxation as well. Flat x% on all income. No loopholes, no deductions, no changing rates. How much did you make this year? Multiply by x% using your $2 calculator. Write a check to Uncle Sam for that much.

Whether that's a fairer system or not is arguable, and has been argued fairly exhaustively here from time to time, but when you say "flat tax", that's what I picture.

So, in reality, we have the most regressive tax system in the entire industrialized world. Great. Adam Smith would think we're a bunch of barbarians.

You've clearly never used public transport in England.

Apples and oranges? Food for thought:

(1) The US spends 4.3% of its GDP on the military, compared to 1.6% of the EU; much of that going to (I would argue unconstitutionally) protect the EU nations. In real dollars, it's about $663 billion to $253 billion. Money being spent on the military is money not being spent on anything you listed.

(2) America's population density is 83 per square mile, vs. the EU's 300. That means (loosely) that we have to build 3.5 times as many units of infrastructure per capita to service our population — from roads and transit systems, to schools, police stations, etc. I'm not sure that would be an even remotely efficient use of resources.

There are plenty of other reasons why it's hard to compare the two, but those are the two big ones that jump to mind.

Sure, but that's true everywhere. The population density of Paris is just as different from some backwoods area of Provence as your examples.