Comment Re:What the tax form should look like (Score 1) 423
Oh and for a concrete example, here is that form, the simplified version with the last two lines combined, using the following values for X, Y, and Z:
X = 2, so we're exactly halfway between a flat tax and total communism.
Y = $25,000, which is a mean income of around $50,000 divided by X = 2 above.
Z = $17,500, which is a mean income of around $50,000 times a 35% tax rate.
That mean income and tax rate chosen because they're nice round numbers close to the current actual figures.
So, that said:
Line 1: Enter your gross income.
Line 2: Divide the amount on Line 1 by 2.
Line 3: Subtract $7500 from the amount on Line 2.
If you made $15,000/yr, which is about full time minimum wage ($7.25/hr * 40hr/wk * 52wk/yr = $15,080/yr), you would pay no taxes.
If you made minimum wage working half time (20hr/wk, 52wk/yr) for a total of $7540/yr, you would get a tax credit of $3730, which would mean a whopping $8 or so extra spending money a day. Don't spend it all on one meal.
If you made twice minimum wage full time for about $30,000/yr, you would owe $7500, which would be about $288 or 15% withheld from each biweekly paycheck.
If you made the mean income of $50,000/yr, you would owe $17500, which would be about $673 or 35% withheld from each biweekly paycheck.
If you made twice the mean income, or $100,000/yr, you would owe $42,500, which would be about $1635 or 42.5% withheld from each biweekly paycheck.
If you made a seven-figure income of $1,000,000/yr, you would owe $492,500, for a tax rate of 49.25%.
If you made an eight-figure income of $10,000,000/yr, you would owe $4,992,500, for a tax rate of 49.925%.
If you made a nine-figure income of $100,000,000/yr, you would owe $49,992,500, for a tax rate of 49.9925%.
But nobody would ever pay higher than a 50% tax rate, because we set our X = 2 which means the maximum possible tax rate is 1/2 = 0.5 = 50%.