How about a new tax bracket, starting around a million, or higher

[angus]

How about a new tax bracket, starting around a million, or higher

I've been thinking more and more about a flat tax.  

What does it cost for a person to live?  30K?  40?  50?  Whatever it is, that's the deduction.  And it would be scaled for your immediate family size.  Say, 100K for a family of 3.  Whatever.

Now, how much does it cost to run the government?  Let's say ten trillion dollars a year, just to pull a number out of my hat.  Okay, so we divide that trillion dollars per year evenly by all 200 million or so income-earners like this:  You claim your deduction, and anything you earn above that deduction gets taxed at a rate equal to an amount such that the federal government never goes into debt, based on some reasonable projection.  It'd take quite a bit of the fuss out of the paperwork (and maybe put a few CPA and lawyer types out of work), but it seems fair.  What would that rate be?  Something like 50% I suspect.  You could do the math more rigorously, but for most americans it would mean a significant tax break.  

For example, say you and your wife make about 120K together.  You have a child, so after deductions and such, you end up with an agi of about 80K for a family of three.  So you pay 20K in federal income taxes.  

Now, under my proposal, you only pay about 10K in federal income taxes.  Fatcats would pay more, of course, but they're paying the same percentage as everyone else.  

Any takers?

[angus]

Bear in mind that I'm making two assumptions based on current realities:

(1) we want to avoid debt

(2) we still want to keep our government spending at current levels.

I'd be all for nixing assumption #2.  I'll take it down to five trillion, or 200 billion, or whatever.  And of course that'll mean you pay less tax.  Maybe you only have to pay 20% or so above the deduction or something like that, depending on how much government we want.  So I am not saying that we should have a ten trillion-dollar-a-year federal burden.  Not saying that at all.  I'm Just going with the current spending level.  Lower spending levels of course would mean lower tax rates.  

In any case, once we have a good projection of the spending, then lets split that spending up fairly.  Tax us all the same percentage after we subtract enough to live reasonably comfortable.  And no, I don't consider the Dick Armey plan a good FTP because his deduction is 26K for a couple filing jointly, and an extra 5K for each dependent.  Don't use "poverty line" statistics for the deduction, unless an impoverished society is your goal.  Ask yourself what kind of place you want to live in, and base the deduction on that.  I think median gross income for a family of X members is a good start.  Steve Forbes puts his flat tax deduction at about 42K for a family of four, which is more generous than Armey's proposal, but the median income for a family of four is about 70K.  Something like that.  I'd go a little higher, maybe 100K for a family of four, but you have to bear in mind that for a given desired level of government spending, the higher the deduction, the greater the percentage burden must be in order to avoid debt.  So, even assuming that you could sell the flat tax idea to the public, and assuming that you could agree on an overall level of public services, we would still need to iron out the thorny issue of a reasonable deduction.  

Of course, if we don't buy into original assumption #1, then all bets are off.  Might as well stop taxing altogether.

[angus]

okay, we got us a ten-man march on washington!  Well, sort of.  (I'm counting the six randnecks and one witch in your signature, as well as you, the baby, and me.)

[angus]

How about the first 50k in wage income is tax exempt.
Then get rid of all tax deductions, credits, etc.

0-50k = 0%
50k-1M = 10%
1M-10M = 20%
20M+ = 30%

Won't cover current spending levels, much less what the congress has signed us up for.  This means that we either go further into debt or adopt some austerity measures.

My rough calculation, based on current spending levels and your brackets would require this:

0-50k = 0%
50k-1M = 14%
1M-10M = 28%
20M+ = 45%

I'm assuming your revenue falls short by about 3 trillion dollars and I scaled everything up by a factor of 1.4 on all brackets.  Correct me if my estimation is in error.

[angus]

how about scaling tax brackets to the cost of living in the given area?

Seems equitable.  I suppose it's a very difficult thing to do.  The data is easy to come by, but you'd have to convince folks to go for it.  Tell a family in New Mexico that because their 100K income gives them the same size house as people in Connecticut with a 400K income, that they ought to pay as much tax.  They'd argue--and they'd be correct--that vacations cost them more, because they have to drive all the way to DFW international airport, whereas the the Connecticut family only has to drive to JFK.  That sort of thing.  And anyway, no one twisted your arm and made you buy that house in Connecticut.  If you wanted, you could have a palace in the desert sands of the Navajo nation for what you paid for that modest A-frame house in New Haven.  

Lots of monkey wrenches in the clockworks.