Hey there. I was pretty curious, so I thought I'd summon up a few facts and figures to check something out. I'm just wondering what effect a flat percentage taxation system would have on the incomes of what most would consider the working class.
In 2009, the United States government collected $2.1 trillion (that's $2,100,000,000,000) in revenues from taxation, as a whole. To compensate for this, I'll use the 2004 figure:
$1.88 trillion. The average income (average, not median, keep in mind) was
$60,528 in 2004, when there were 113,146,000 households, approximately. This means that the product of the two, $6.85 trillion, is the income of all said households together. Thus, 30.66% of the income earned by households in the United States goes to the government in taxes.
Presuming you'd want to keep the revenue relatively stable, here is the tax money spent at each graduation level of the US tax bracket system (in 2004), along with the median income. Note that these are the single filer status incomes; I'm using the numbers just because they're convenient numbers.
$7,150 -> $2,192 $29,050 -> $8,907 $44,389 -> $13,610 $70,350 -> $21,569
$146,750 -> $44,994$319,100 -> $97,836Going by the same brackets in the 2004 tax code, a person earning each of the above would pay this in taxation:
$7,150 -> $715 (effective rate = 10.0%) $29,050 -> $4,000 (effective rate = 13.8%) $44,389 -> $7,835 (effective rate = 17.7%) $70,350 -> $14,325 (effective rate = 20.4%)
$146,750 -> $35,717 (effective rate = 24.3%) $319,100 -> $92,593 (effective rate = 29.0%)Interesting. So for each of the figures, the increase is:
$7,150 -> 206.6% increase $29,050 -> 122.6% increase $44,389 -> 73.7% increase $70,350 -> 50.6% increase
$146,750 -> 26.0% increase $319,100 -> 5.7% increaseThe pivot point in this case would be at:
92,593 + 0.35(x - 319,100) = 0.3066x
92,593 - 111685 = -0.0434x
0.0434x = 19,092
x = $439,908
So essentially, if you're a single filer, your taxation would be higher if and only if you made equal-to or more-than that figure, $439,908.
