>>>>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

It's relevant to the overall taxation level. It doesn't make sense to look at income tax in isolation - surely what matters is the overall amount one contributes in taxes..
In my simplistic example the UK citizen would be paying about $1,500 less in income tax than a US citizen. With a VAT rate of 20% the UK Government would recoup that if $7,500 was spent on VATable items - which someone earning $50k in the UK would certainly do.