In honor of tax day I am proposing my own tax code. It is obvious to everyone who’s paying attention that anybody, including your average third grader, could come up with a tax code that makes more sense than our current code. As a result, this is an open thread for all new tax suggestions with the following parameters: it must fit on a cocktail napkin, assume all current taxes have been abolished and we’re starting fresh, and have no concern whatsoever for revenue neutrality. Here’s mine:
Everyone pays 15% up to $150,000; all income above $150,000 is taxed at 25%; one deduction for poverty income of $25,000; income is defined as all money you receive from whatever source (capital gains, inheritance, etc. is all regular income); corporations are taxed as individuals
The median family income in my state (TN) for a household of four is $64,615. The tax paid by that family would be $5,942.25 for an effective rate of 9.2% or $495.19 a month. The calculation took me under a minute: $64,615 – $25,000 = $39,615 x 15% = $5,942.25. Withholding of 15% would total $9,692.25 which would result in a tax refund of $3,750.
A millionaire would pay $231,250 for an effective rate of 23.12%. $150,000 – $25,000 = $125,000 x 15% = $18,750; $850,000 x 25% = $212,500 + 18,750 = $231,250.
What kind of tax would you impose?