High-Earner wrote:
Extrapolating, someone earning $40,000 who pays 20% in taxes is paying 40% of their non-essential income ((0.2 * 40000) / 20000) in taxes. The person making $100,000 and paying 35% taxes is paying 28% of their non-essential income ((0.35 * 80000) / 100000) in taxes.
...I should have written this out first. The second number should be 43.75% - ((0.35 * 100000) / 80000). In any case, despite being in a 15% higher tax bracket this person is paying a similar percent of their non-essential income, and that percentage drops with higher incomes. The point remains that if you assume a person needs a basic amount just to live on, having lower income folks pay lower rates makes sense.