Wednesday, April 17, 2013

Why a Flat Tax Benefits the Government

By completely getting rid of the Tax Code for Individual Filers would actually benefit the Government.  The table below shows a simple method for a Flat Tax by Income Level using data from the IRS for 2010.  The Flat Tax Rate for anyone making under 100,000 combined would not exceed  10% while the top Tax Rate would be 28% for those making over 10 Million a year.

Using this simple method the Government would have collected 115 Billion Dollars more in Tax Revenue in 2010 versus the current methods used for taxation.    


Here is a simple example using Real Income in 2012 which puts someone in the 100,000 to under 200,000 Grouping with a Flat Tax Rate of  15%.  Let's say you are married and had a combined Income of $120,000.   Under the Flat Tax Rate you would have paid $18,000 in Federal Tax.  Meanwhile using the current IRS Table and a Standardized Deduction you would have paid roughly $20,000 in Federal Tax.  Thus by using a Flat Tax you would have saved roughly $2,000.

Naturally if you have kids you would be hurt by a Flat Tax unless adjustments were made to account for that scenario.    

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