I’m pretty sure you calculated it wrong. The way tax tables work is they charge progressively, so you don’t get killed if you slip into a higher bracket. I explained it in more detail in my response to Ryan’s comment. Plus, as I said, the rates I recommended were off of the top of my head. I assume someone would have to do a lot more research than me, to implement a fair rate.

I was thinking the tax tables should start above the poverty level (around $22K for a family of four) and exclude everyone below that point. And, people would pay the flat rate on anything above the poverty rate. So, someone making $32K with a family of four would pay $1,000 in taxes (10% of $10,000), while the same person making $72K would pay $5,000 in taxes (10% of $50K). The same family of four with an income of $150K would pay $14,800 in taxes (10% of $78K, plus 15% of $50K). This would be very progressive, while at the same time, ensuring everyone over the poverty level pays some income taxes.

I agree there would definitely have to be a more exhaustive study of the demographics. And, the tax rates could probably be even lower or more progressive. But, the most important thing is to spread the tax burden more evenly. To have 47% of household and most corporations pay zero taxes is not fair to the 53% that have to cover the cost of government.

I don’t think we will see anything like this soon, however. Why would 47% of the population support what would effectively be a tax increase when they aren’t currently paying anything?
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How would it affect you, Bret?

Best,

Len
Len Penzo dot Com
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According to Steve Forbes (when he was running for President), if filers all paid a flat-rate of only 15%, we would collect a lot more taxes than we do with the current system. And since 47% of household may not even pay Federal Income Tax for 2009, I think he is probably right.

My recommendation would be to have rates similar to:

10% for above poverty to $100%
15% for $100K to $200K
20% for above $200K

If we had brackets this low, we could ditch all of the credits and deductions. I think people would be a lot happier than paying the current 15-35% and working through a bunch of receipts.

As for shrinking the size of the Government, that is the subject of a whole new post. I could never fit that in the comment box.

In theory, I’m all for it – but for me that depends on how it’s implemented.

For example:

When you call for a flat tax, does that also cover the payroll tax?

If not, what will be my flat tax rate?

Will the flat tax come with a corresponding cut in the size of government? If we can agree to cut government (including entire cabinet position departments), as well as a lot of other wasteful government programs, then I suspect our flat tax rate can be astoundingly low.

Our economy would certainly be much better off!

All the best,

Len
Len Penzo dot Com