Timmerov's Blog: income tax

Thursday, July 13, 2006

income tax

i thought i'd elaborate on my propopsed income tax. here comes the math. i=income. d=deduction. r=instantaneous tax rate. g=tax graduation factor. the tax rate on any dollar is: r = ( i - d ) / ( i - d + g ). this satisfies the following conditions: r=0 when income equals deduction, r=1 when income is infinite, and we can tweak it without changing the basic shape with g. the total taxes you'd pay would be the sum of the taxes for all of your dollars. ie the integral of that formula. which works out to be: taxes = i - d - g log( i - d + g ) + g log g. simple, no? here are some numbers for 2003. divde the population into the 6 groups that actually paid taxes: the top 1%, the top 2-5%, the top 6-10%, the top 11-25%, the top 26-50%, and the bottom 50%. they made on average: $819k, $176k, $109k, $73k, $41k, $13k, respectively. they paid average rates of: 24%, 16%, 12%, 9%, 7%, 2%. and we fell short of balancing the budget by about 50% of income tax revenues. under my plan to balance the budget the tax rates would be: 53%, 22%, 14%, 10%, 5%, 1%. that's a tax hike for anyone who made more than about $73k. ie 1 in 6 of us. and a tax CUT for the other 228 million americans. if i don't bother to balance the budget and just distribute the taxes fairly then the rates are: 41%, 14%, 9%, 6%, 3%, 0.6%. ie substantial tax cuts for everyone who doesn't make more than $295k.

¶ 10:40 AM

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