tthor Wrote:
Oct 24, 2013 4:10 PM
A Flat Tax with a 'tax holiday' on everybody's first $X of income is a simple replacement for the EITC. For example, let the 'tax holiday' be $20K, and let the flat tax rate be 20%. This results in highly progressive *effective* tax rates. If your annual income is $0 - $20K, your tax rate is a big fat 0%. After that, in increases gradually: $30K = 6.67% $40K = 10% $50K = 13.33% $75K = 14.67% $100K = 16% $150K = 17.33% $250K = 18.4% $500K = 19.2% $1,000K = 19.6% And so on. A Flat Tax with a 'tax holiday' is in effect a very simple progressive tax system with only two income brackets; the tax rate for the first bracket just happens to be 0%. Adjust the Flat Tax rate to achieve desired revenues; adjust the dollar amount of the 'tax holiday' to protect the poor and provide progressivity in effective rates. Easy peasy, lemon squeezy. Why does everybody make like this so dang difficult?