>>>What tax banding would you regard as equitable ?
>>>In the UK currently approx:
>>>
>>>Personal allowance : £7,500 (ie deducted from gross income to determine taxable income) then
>>>20% to £35,000
>>>40% to £150,000
>>>50% over that.
>>>
>>>No 'tax credit' as such but government pays ~£1000 for first child and ~£700 for each additional child to the family.
>>>Also bear in mind that there is a 20% VAT on most goods (main exception being food) plus a high rate of duty on fuel which everyone pays regardless of income.....
>>
>>I'd prefer a flat tax rate, but here's a very rough stab at a graduated income tax:
>>
>>I'm going to use the acronym MWA (minimum wage annualized) which is a formula defined as Minimum Wage Hourly Rate * 40 Hours per Week * 52 weeks in the year.
>>
>>1. Income < = MWA taxed at 1% (everyone needs skin in the game)
>>
>>2. MWA > Income < = MWA*2 taxed at 10%
>>
>>3. Income > MWA*2 taxed at 25%
>>
>>4. This is an incremental tax structure. The first MWA of income taxed at 1%, the next MWA of income taxed at 10%, and thereafter taxed at 25%.
>>
>>5. All deductions go away. Reduce size of IRS by 90%+.
>>
>>6. This includes no deductions for children. People with kids use MORE public resources. Why do you get a deduction for using MORE public resources???? (For the record I do have a child.)
>>
>>
>>Result (using minimum wage of $7.25/hour):
>>You make min wage ($15,080) you pay $150.80 in income tax.
>>You make 2x min wage ($30,160) you pay $1,658.80 in income tax.
>>You make 3x min wage ($45,240) you pay $5,428.80 in income tax
>>You make 4x min wage ($60,320) you pay $9,198.80 in income tax
>>and so on, and so on.
>>
>>I'm sure my percentages are off for each income level so it will need adjustment as necessary to yield required tax revenue.
>>
>>Again, this is a very rough stab so I'd welcome feedback from others.
>
>It would be hard to convince me that a system that doesn't allow a reasonable tax-free allowance would work well. With an allowance:
>(a) Everyone receives the same benefit. In fact, arguably, the higher earners receive most benefit since they would otherwise be paying the higher rate on the amount.
>(b) The cost of collecting (under your structure) less than $150 from a huge number of people would probably result in an increase in the size of the IRS - certainly not reducing it by 90% !
>
>I also don't buy into the argument against child benefits/allowances. Again high and low earners benefit equally and, at the lower end of the scale, it can mean that children are not raised in poverty.
>
>BTW I read this : http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0
>If I got it right then a family with two children would earn $50K before paying tax in the US. A rough calculation for a UK family in the same circumstances:
>
>Gross Income : £32,000
>Allowance : £7,500
>Taxable Income: £24,500 @ 20% : £4,900
>Child Allowance recd: £1,700
>
>Net paid to govt : £3,200 ( i.e 10% of gross income)
>
>Applying your structure to a $50K earner I calculate that they'd be paying $6,650 - so, given the effect of UK VAT, maybe about the same ?


Question - why do you drag the VAT in there ? - which is something like Sales Tax in the US, ie an indirect tax