interesting exercise. whats your remedy? are you saying person C should pay more than that 40% because he/she makes more? how much do you think person C should be paying?
Note: for Person A I made a mistake - the taxes are 10% on $50,000, not 10% on $100,000.
The remedy would be to somehow go back to a middleclass society where hard work is rewarded. Obviously we are now competing with China and India and their cheap labor. It is a difficult problem. But bottom line is this country has to start manufacturing stuff again. When Henry Ford invented the assembly line and was churning out 2000 cars a day he was also paying his workers good wages. They were able to prosper. Now we are moving to a society that will be part third world. In Africa you get the same discrepancy between rich and poor.
I am going to say the top 1% should pay 80% taxes. At least until they restore employment and bring back quality jobs to this country.
Person D: (Banker)
Net Income (2008) = $10,000,000
Taxes = $4,000,000 (40% of $10,000,000)
Total Income 2008 (after taxes) = $6,000,000
Net Income (2009) = $20,000,000
Taxes = $16,000,000 (80% of $20,000,000)
Total Income 2009 (after taxes) = $4,000,000
We know the rich are getting richer, the poor poorer. So let's take another example. Assume this person (banker) earned $10 million in 2008 and paid 40% taxes (unlikely). In 2010 after all the bailouts he earns $20 million and now the public demands he pay 80% taxes.
He is still making $4 million after taxes - about 66.6% of his 2008 pay.
The rich are doubling their income easily which offsets the increase in taxes.
My guess is if taxes on them increase to 80% their incomes would dramatically increase to offset the loss.
The overall trend: Wealth is being concentrated in a third world manner which is not healthy and conducive to a first world society that invents and prosper. With third world society comes crime, hunger, disease.