Exactly, people constantly debate this but it's a solved problem. Don't tax input, tax output.
It also gives you a better scalpel. Instead of trying to wrangle the different income structures (blends of w2, 1099, stocks, bonds, real estate, etc etc), differentiate via the purchases:
- superyachts: very high tax
- luxury cars: high tax
- vacation homes: high tax
- clothes: low tax
- staple groceries: no tax
It also gives you a better scalpel. Instead of trying to wrangle the different income structures (blends of w2, 1099, stocks, bonds, real estate, etc etc), differentiate via the purchases:
- superyachts: very high tax - luxury cars: high tax - vacation homes: high tax - clothes: low tax - staple groceries: no tax