Let's say we combine income and capital gains...

[limpyhobbler]

3. It might have some issues.

Would you see a lot of people earning right up to the Y amount but not going over? Because if they go past 'Y' they only keep half. So even though they would still make money, the incentive would be less. It would be half. So in this example, people might bunch up around the $79,000 mark. And so that bunch would avoid tax and decrease revenues. Possibly that could happen. Why not phase the tax rate in gradually as income increases, to avoid such drastic tax brackets that might distort people's incentive structure? It might be a good idea, I'm just raising this other question.

Also, notice this idea is a flat tax. It's not like a Steve Forbes flat tax because the 50% rate is much more. But it does raise an issue of fairness. How is it fair that income between $80k and $100k should be taxed at the same rate as income between $80 million and $100 million? $80k isn't really that much money for a larger family, or in some cities.