I was just referring to then numbers above.
So what % would a flat tax have to be to equal that?
I actually think a lot of people would love something like that.Hard to know for sure, but it looks like about 20% would do it. It can be combined with a voucher system to stay "progressive". For example, you institute a flat tax of 20% on all sales and give everyone $5,000 for free every year. I mean the IRS cuts everyone a check for $5,000 at tax time. This means your first $25k of expenses are untaxed ($5k*5=25k). So someone who makes $50k per year pays zero sales tax if they spend half of their paycheck (keep in mind, no income tax). Someone who makes $30k profits, and someone who makes $100k and spends half pays an effective sales tax rate of 10%. That is they pay 20% on 50k of expenses, but get $5k back at the end of the year. Someone who makes $1.5M and spends $700k would pay approximately $135k in taxes (700*.2-5) for an effective tax rate of 19.2%.
It would indeed create a black market for sales tax, but it would eliminate the black market for income tax, so I think it's a wash.
So you're saying my wife and I are paying more than my fair share? Figures. Guess that's why I got hit with a huge tax bill this year despite both of us claiming 0 on our W2's. The state of Utah apparently wanted more of my money too.
I live for the day we get a flat percentage across the board for taxes. If everyone paid 20% of their income or whatever, there'd probably be less inequality when it comes to taxes. Or you know, the government could stop trying to spend a ton of money on god knows what and just let me spend my money where I want to.
And I'm still waiting to see my tax cut hit my paycheck.
Mine went up a whole $3. Whoopty freakin' do.And I'm still waiting to see my tax cut hit my paycheck.
Lucky...Mine went up a whole $3.
Mine went up $8.Mine went up a whole $3. Whoopty freakin' do.
I really hope no-one is hoping to do away with progressive taxes unless they are proposing massively flattening the income inequality curve at the same time?
Want the poor to pay more tax? Simple. Pay them more and they will pay more tax. Want the rich to pay less tax? Simple, pay them less and they will pay less tax.
Income inequality (which leads to wealth inequality) is one of the planet's greatest social ills. It gets worse every year as the poorest are caught in the race to the bottom and the richest swept along in the race to the top.
Total 2017 Budget: $4T
Total 2017 Tax revenue: 3.3T
Total Revenue from Income Tax: $1.6T (not including SS, corporate tax, etc.)
Percentage of Revenue from Income Tax: 48%
Total Income Tax Needed for Balanced Budget (assuming no change in spending or revenue allocation): $1.9T
Number of Adults in the US: ~252M
Number of Taxpayers in the US: ~141M
Tax Liability Per Adult: $7539 (Up from last year)
or
Tax Liability Per Taxpayer: $13,475 (Up from last year)
So, if you think retirees and homeless should pay their fair share of taxes, your number is $7539. If you paid less than that you're not pulling your weight. If you think retirees and homeless should not pay their fair share of taxes, your number is $13,475, if you paid less than that (by yourself, not jointly), you're not pulling your weight. If you're married the numbers are $15,078 and $26,950 jointly.
If you're single, you need to make approximately $50k per year before the government takes $7539 in federal taxes. If you're single, you need to make approximately $75k/year before the government taxes $13,475. Make less than that and your fair share is being covered by someone making more than you. More than that and you're probably covering others.
For married people, the numbers are twice that. So if you want to claim that you're paying your fair share you may need to be making approx $147k/year as a couple.
Sources:
https://en.wikipedia.org/wiki/United_States_federal_budget
http://calcnexus.com/federal-tax-calculator.php
With a flat tax rate the lower paid people in society will need to be paid a lot more in order to afford the flat rate tax. That will be a tricky problem to solve.Total personal income reported in 2017: ~$11T (based on eyeballing 2016 data)
Total income tax needed for balanced budget (assuming no change in spending or revenue allocation): $1.9T
Effective flat tax rate: 17.2%
Compared to the numbers I posted above, the flat tax rate would be $8636 (for $50k of earnings).
Sources:
I'm not sure which of these numbers to believe. I'm going for the worse of the two and adjusting it by the year-over-year adjustment of the one with later data.
https://www.statista.com/statistics/216756/us-personal-income/
https://taxfoundation.org/summary-latest-federal-income-tax-data-2018-update/
With a flat tax rate the lower paid people in society will need to be paid a lot more in order to afford the flat rate tax. That will be a tricky problem to solve.
10-20% on people who are paying very little to no income tax isn't affordable if they are barely making ends meet as it is. In Canada I believe about 1/3 of taxpayers pay no federal or provincial income tax so having to pay tax when you don't pay tax now will definitely be a financial burden. Not saying I disagree with a flat tax but it will impose a hardship on lower income tax households and individuals depending on the cut off point.The increased capital available to the top earners being reinvested would allow for higher salaries further down the pyramid, assuming you believe in the benevolence of "big business" to reinvest profits but also, that depends on exactly what percentage the flat rate is; if it was 40-50% across the board then yeah, low earners would struggle but if it was 10-12.5% or even upwards of 20% it should be affordable.
The country I live in, Slovakia, had a flat tax rate of 19% from 2003 until about 2014 but now does have a secondary, higher tax bracket of 25% for earnings above €34,000 (US$39,000).
disband the IRS.
Also, do away with deductions and a complicated tax code and for good measure disband the IRS.
"A bit harder"While it would be a bit harder on lower income folks, it seems like a fairer way to do taxes. That way everyone pays the same rate regardless of how much they make. Also, do away with deductions and a complicated tax code and for good measure disband the IRS.
"A bit harder"
It would be utterly crushing for millions of people.
Yes it would. Someone 'just' getting by today in a system where a huge portion of their earnings is not taxed are no longer going to just get by when suddenly they are paying more tax. I think we forget or ignore just how poor some people are.Would it though?
Still, if you're going to tax people you need to tax everyone. The only fair way to do it is to tax them at the same rate.