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Why isn't the same percentage used for all "tiers"? Isn't the whole point of "per cent" that it means "per 100 equal units"? It already is proportional to their income or to whatever is being measured! What you are proposing is a switch to a flat tax. It initially seems so easy to declare a single percent, and everything is taxed at that rate. There ...


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Suppose Person A earns $10,000 a year and Person B earns $1,000,000,000 a year. If you tax Person A at 50%, you'll cause enormous damage to their quality of life and get $5,000 of revenue as a result. The revenue is small compared to the damage, so we should use a much lower tax rate. If you tax Person B at 50%, you'll cause a very tiny impact to their ...


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You said, Why isn't the same percentage used for all "tiers"? Isn't the whole point of "per cent" that it means "per 100 equal units"? It already is proportional to their income or to whatever is being measured! The thing you're missing is that tiered plans (such as the example you've illustrated) are not meant to be proportional. The entire point of ...


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I have never seen a tax system like the one you mention. Income tax rates are usually marginal rates. What this really means is that you have something more like this: 1% on the first $10,000 of income 5% on the second $50,000 of income 50% on the third $100,000 of income I made up all the rates just for illustrative purposes. From this you get tax ...


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One important thing that's left out of the other answers here is that many banks initiate loans but do not keep them on the books (they might still service the loan, but they don't own the principal any more). At least in the United States, for large loans such as mortgages, there is a strong secondary market on mortgage loans; once a bank offers you the ...


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Many factors go into the methods banks use to determine what interest rates they charge on loans. Many other factors go into determining how profitable those loans are, or how readily consumers use them under given conditions. It's tempting to over-simplify this, but the only simple truth is that it's complicated. Retail banks are essentially in the ...


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Most banks make profit on the delta between the rate that they can borrow the money from the central bank and the rate they can charge consumers. The more they can lend, and the larger the difference the more profit they make. Since lower rates encourages more borrowing, I would assert that lower rates is good for the profitability of banks. Also since ...


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