Eddy Elfenbein takes a stab at what it would take to make a flat tax revenue neutral. The answer is about 32% tax on income above 37K.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
That would have quadrupled my taxes this year.
Njorl: you make more than $37000, and only pay 8% in taxes?
Care to let us in on your method?
Njorl: you make more than $37000, and only pay 8% in taxes?
Care to let us in on your method?
Posted by Bergamot
Multiple severely disabled children. Interested?
I am too lazy to read the link, but I will assume the calculation exempts the first $37,000 in income from taxation. The 32% rate applies to all income above $37,000.
The first $37,000 would be tax free, so - in his model - a really big chuck of the electorate would pay nothing. So I think a minimum tax of 5% should apply so that everyone pays something and feels the sting of government spending.
I'd rebate the 5% to, say, a blind quadrapelgic, but she doesn't get to vote.
Remember, folks -- this model is only revenue-neutral, not balanced-budget. *smirk*
My taxes would increase 35%, plus or minus 5%. Since this plan (theoretically) eliminates all corporate taxes, does that mean consumer prices would decrease as companies reduced their margins (through price competition) to their current levels? So it would be anti-inflationary?
Has anyone ever studied the relationship between corporate taxes and inflation? It would seem that corporate taxes are inflationary per se. Sorry if that's a naive question coming from a civilian.
I'd be curious to see how much the rate would fall if the exemption were lowered to, say, $5,000.
I side with Creech, only more so. Every person of able mind should have to pay. Responsibility for some portion of the bill is the price of a voice in how the democracy spends money. If you get more from the government than you contribute, you shouldn't get to vote.
Every person of able mind should have to pay.
Agreed in principle. My preferred plan is to pay everyone $X per year, then tax all income at Y% with no deductions. Your effective tax is 0 if your income is X*Y; if it's less you end up with a net benefit. Everyone faces the same marginal rate of Y, whether they're a net payer or receiver, and tax increases affect everyone. Determining the values of X and Y is left as an exercise for the reader...
Why not start with the poverty line as the base exemption?
I'd rather have *two* flat taxes: a VAT or sales tax of 20% on spending above some poverty-level of consumption (say $5k/person), plus a 20% tax on all income above some fairly high level (say $200k). So the middle income folks pay the consumption tax and the rich pay the income tax. Automatic progressivity.
--Njorl: you make more than $37000, and only pay 8% in taxes?
In federal income taxes, my family also paid only an overall 8% in taxes on our earned income (it was about 11% of AGI). This is excluding state taxes, prop taxes, SSI, etc. etc. etc.
--Care to let us in on your method?
We own a house, give to charity, and have a child, only one parent works, and we don't live somewhere where state prop taxes trigger AMT. One parent makes about 120k salary, the other doesn't work, and we max all of our possible adjustments to income. Between 401(k) and HSA, we're down to 105k. Our itemized deductions get us down another 40k--25k in interest, 6k in charity, 10k in state and prop taxes. The kid gives us tax credits, too.
It's not that difficult if one of the spouses opts out of the work world. That was the original idea of Galt's getting us all to strike, was it not?
Here is what we should do: Drastically reduce social spending, but implement an anti-poverty initiative whereby marginal tax rates get progessively higher the poorer you are. It would incentivize wealth creation.
Just trying to fit in.
There is nothing more fair than a Goods and Services tax on everything, with no exceptions.
The catch is there can be no exceptions for anything, anyone, any reason, including government, military, non profits, churches, foreigners, etc.
The only exception will be if the goods and services are exported.
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Follow this with a flat income tax with no exemptions (beginning at .01 income) and that will be another very fair tax.
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The question is, what would be the rate of these two taxes have to be to virtually wipe out all other forms of taxes, including excise taxes and duties?
--There is nothing more fair than a Goods and Services tax on everything, with no exceptions.
Fair at what cost? The govt will now invade every SINGLE aspect of your life to determine what Goods and Services you contracted for, bartered for, bought or sold.
It's bad enough your employer reports directly to the IRS. Do you want your dry cleaners, your shoe repair, your babysitter, your cable repairman, your tree limb cutter, etc. doing the same?
mouse need to find some cheese to chew on...
Traditionally, most Revenue systems have largely ignored goods and services that are bartered.
What is wrong with service providers having to report and pay taxes on services sold?
In most jurisdictions with a sales tax, such people already report for sales tax purposes.
It is precisely because of the broad based nature of the tax that makes it very fair.
And when every time someone turns around, sneeze, and reach for a package Kleenex and pay their 7 or whatever percent tax on it, they realize that governments do not run for free.
Nor do wars and empires come cheap.
Let them then figure out how much they want government to do or not do.
Just eliminate all exemptions, set a base minimum starting point for taxation, and then have a progressive rate that increases linearly on every single next dollar you earn up to a a maximum rate on some income level.
It's not that hard to do. You could write a one line perl script to calculate your taxes and a tax form would have like three lines.
In fact the simple set up would be.
as an example--set exempt income at 40k, top bracket at 240k, and have initial tax rate at 0% and final bracket at 40% (I don't care about the numbers, but you could set them to make them budget neutral based on projections of revenue..)
Then the tax form would be like this:
1. Tell us your income, I. If I is less than 40k, stop. You pay no tax.
2. If I>$240,000, multiply I*.4=____________. This is your tax.
3. If 240k > I > 20k, then put I into this formula (which you could hide or automate for those scared of math)
(I-40,000)*((I-40,000)/200,000)*.4=_________. This is your tax.
...and you could keep progressivity and eliminate all the complications.
Sheesh.. it's not that hard to do.. what's harder is getting people to give up their tax breaks...
Why Not,
Maybe I'm being too linear here (sorry), but doesn't that mean you get a huge tax increase on your 240,000th dollar?
"...and you could keep progressivity and eliminate all the complications.
Sheesh.. it's not that hard to do.. what's harder is getting people to give up their tax breaks... "
The complications are figuring out the current taxable income, not in calculating the tax once you get there. All you do is look up your income in this big IRS table and they tell you your tax owed. Our current tax brackets would work perfectly fine, it's the deductions that make in complicated.