In before "But nobody in the highest bracket ever actually paid that much!!"
Only the ignorant think progressive taxation is somehow "unfair". They simply don't understand how it functions.
The reality is that both Middle Class Jim and Jeff Bezos pay the exact same rate on the first 50K they make in a year. It's just that that 50K is all Middle Class Jim makes for the entire year. While Jeff reaches that figure in the first few hours of the year.
The point is that NO American is required by a progressive tax system to pay even one penny more than any OTHER American on the
same amounts of annual income. Nothing could be more equitable.
A lot of people honestly don't understand this. I've had people tell me, and actually believe it, that they took a promotion or a raise or some overtime work or a side gig and it put them in a higher tax bracket and they took home less money as a result. In my experience it's pretty much impossible to convince them otherwise.
(I do think that some employers miscalculate the amount they withhold, and the result might in some strange circumstances end up as a lower net amount on the paycheck... but again, a lot of people don't understand or believe that these are just preliminary estimates and that if too much is being withheld, you'll get that back at the end of the year when you actually file.)
That said, I live in Canada where the government plays very stupid accounting games with hard cut-offs for some benefits and entitlements. Some crazy, but true, examples:
1. A few years ago the Feds decided it would be a good idea to help low income families with College and University Tuition for their children. Great idea so far, but the genius plan that they came up with was that any child coming from a family with a household income of less that $60,000 would have 100% of their tuition payed by the federal government. Are you waiting for a second part of the plan? Nope. That was it. If your household income was $60,001 you were on your own. (That's not even bringing up the fact that if you're a kid from a low income family, working hard to earn a scholarship became pretty much a fruitless endeavor because everyone else in your income bracket was getting a free ride as well.)
2. If you are a low income earner in Canada ($44,000 or less annual income if you're single, and going up from there depending on marriage and number of dependents), you are eligible for a GST (sales tax) rebate ranging from $80 per year for a single person at the very top ($44,000 annual household income) to $1200 per year for a family with four children at the very bottom (less than $9200 annual household income). The cutoffs for the categories are extremely abrupt. So, for example, if you make $44,001 you get nothing, but if you make $44,000 you get $80; if you make $42,001 you also get $80, but if you make $42,000 you get $180. (So in that sense, and within a $99 margin annually, you do bring home less if you make more.)
3. If you have medical expenses in Canada that are not covered by medicare (most medications taken outside of a hospital are not covered), government will pay any costs over the amount of your income. So if you make $800 per week, and your medicine costs $800 per week you get nothing. If it costs $801 per week you get $1. If it costs $10,000 per week you get $9,200. And if you just quit your job and go on welfare you get the full cost of your medicine, whatever that might be, plus a welfare check that gives you a little bit for food and shelter. (Welfare isn't much, but it's certainly better than working your ass off all week to pay for your medicine only to take $0 home.)
4. If you buy a piece of land, and divide it in two, and sell the second piece, then you don't need to charge/pay sales tax, regardless of size. If you buy a piece of land, and divide it into three or more pieces (again, regardless of size), then you will need to charge/pay sales tax, which is 15% or very near in a lot of provinces. (Let's just forget that you've already spent the money to have the land surveyed and have paid taxes on that service.)
5. Our Unemployment Benefit rules are changing all of the time, but there have been times when taking any side work you could scrounge together while unemployed and looking for steady employment would result in 100% of those earnings be clawed back from your Unemployment Benefits check (other times it is 50%, and other times it's 100% or 50% after a certain amount). So if you were receiving $400 per week in Unemployment Insurance (actually, we call it Employment Insurance now, or EI), and you went out and did an odd job for $150, your EI check (cheque for the Canadians) would be $250 that week. Meaning you got the same for staying home on your ass. But it gets worse, because you're only eligible for a certain number of weeks (location specific), and any week you get any EI, you lose a week of eligibility. Which meant that if you made $399 while on EI, then you would receive a $1 check, and lose a week of EI benefits for that dollar; but if you made $400 that week, you wouldn't receive any EI check, and your claim would be pushed back one week. (So if you work for $399, not only are you working for free, but unless you can convince your neighbour to let you mow his lawn for $1, you are also working your way out of your benefits.)
These are just the ones that come to mind off the top of my head.
