This is going to be an interesting thread...
The way I figure it, how you distribute taxes and how high you set taxes are two separate debates - I want to address them both eventually, but first I want to talk about the distribution problem.
First off, I'd like to know how you'd re-design the Tax Code if you had a chance - how would you distribute the Tax Burden? I sat down and crunched the IRS numbers from 2005 and from that, I've come up with the following information that I'll use in this thread. The IRS divides individual taxpayers into six basic "brackets" based on Adjusted Gross Income:
Six Adjusted Gross Income Brackets:
(1) Under $15,000
(2) $15-30,000
(3) $30-50,000
(4) $50-100,000
(5) $100-$200,000
(6) $200,000 or more
If you take Gross Income and subtract Deductions, you get a person's Taxable Income. I've taken the actual number of income tax returns in each bracket and calculated what percentage of people fall into each bracket:
Percentage of Taxpayers in each Bracket:
Under $15,000: 11.29
$15-30,000: 24.44
$30-50,000: 23.05
$50-100,000: 27.49
$100-200,000: 10.34
$200,000 or more: 3.38
So that's how the tax-paying population breaks down - next, I calculated what percentage of taxable income each bracket reported:
Percentage of Taxable Income reported by each Bracket:
Under $15,000: 0.71
$15-30,000: 5.02
$30-50,000: 10.79
$50-100,000: 26.66
$100-200,000: 20.82
$200,000 or more: 36.01
So, 11.29% of US Taxpayers earned $15,000 or less and combined they reported 0.71% of all Taxable Income. Similarly, 3.38% of US Taxpayers earned $200,000 or more and combined they reported 36.01% of all Taxable Income.
Now here's the question and my challenge to everyone here - you have the number of people in each bracket and you have the percentage of total income in each bracket.... and added up, 100% of taxpayers earned 100% of all taxable income - but they also have to pay 100% of the taxes. The question is, how would you divide up the tax burden between the different brackets? What rationale would you use? If you're for a Flat Tax, for instance, each bracket would pay the same percentage in taxes as they earn in income (ie, $100-200,000 earns 20.82% of income, so under a Flat Tax they'd also pay 20.82% of taxes). If you believe in Progressive Taxation, the poor would pay less and the rich pay more... if you believe in Regressive Taxation, the rich less and the poor more.
What I'd like to see is how everyone would divide up the 100.00% Tax Burden - I've got how the actual numbers break down and I've got my own ideas, and I'll post them here also... but first, I'd like to see some other peoples' ideas about how to distribute the taxes.
So who's up for a challenge?
