I think most of us can live with the tax system not being optimised for the few individuals that strike it lucky in one year and then do not much at all for the next half-decade.
The issue is not with people who strike it lucky in one year, the issue is people who invest in multi-year projects and then receive the payoff in a short time. There needs to be some way of being taxed over the total time spent on a project, rather than the time spent receiving a cheque at the end.
As a proportion of taxpayers, how many would have that pattern? Should the tax system be optimised for that proportion?
And it's a no-win situation - how do you prove how long you've been working on a project? How outraged would people be to be back-taxed? After all, if you want to spread your taxes over previous years, you now need to pay more taxes for those previous years. And how do you differentiate between a 'lucky windfall' earner, and someone who has simply engaged in a lucrative new career (such as students moving into professional careers)?
The difference in marginal rates is noticeable, but not crippling, and this 'lucky windfall' pattern of earning is not very common.
