Pick A Number And Tell Me What’s Fair

I caught Lindsey Graham on “Meet the Press” last week (December 11, 2011). During a discussion of taxes on the rich, he smugly asked another panelist how they would tax the upper ranges of income. “Pick a number,” he mocked, “tell me what’s fair.” Forgive me, but I find Mr. Graham to be a disingenuous man, lacking a basic sense of fairness.

Well, here’s a simple idea that many will consider fair. I like the idea that all Americans should be taxed at the same rate, but a flat tax at the same percentage, for all income levels, is just a stupid idea. How about a stratified flat tax? where all Americans could be taxed at the same rates, plural. I mean a tax structure where the percentage changes as the income rises, at levels. Not in the old manner, where we looked up our total income and read off the percentage to be offered. Rather, a chart with many strata that all could use, a rate for income from zero to fifteen thousand; another rate for income from fifteen thousand to thirty thousand, etc.

I cannot claim unique invention of this kind of thing. This is a case of polygenesis, probably more than 100,000 people have had this idea, and even then I may be putting myself into too exclusive a group. I heard James Carvill recently say that he would back one.

Fine tuning the numbers would best be left to others, but here’s a model for the idea:

0 to 15,000; 0% (no tax);

15,000 to 30,000; 5%; tax on this level at $30,000, $750; total tax as a percentage of income, 2.5%

30,000 to 45,000; 9%; tax on this level at $45,000, $2,100; total tax as a percentage of income, 4.6%

45,000 to 75,000; 12%; tax on this level at $75,000, $5,700; total tax as a percentage of income, 7.6%

75,000 to 125,000; 15%; tax on this level at $125,000, $13,200; total tax as a percentage of income, 10.6%

125,000 to 225,000; 19%; tax on this level at $250,000, $19,000; total tax as a percentage of income, 14.3%

225,000 to 375,000; 23%; tax on this level at $375,000, $34,500; total tax as a percentage of income, 17.8%

375,000 to 600,000; 27%; tax on this level at $600,000, $60,750; total tax as a percentage of income, 21.2%

600,000 to 900,000; 32%; tax on this level at $900,000, $96,000; total tax as a percentage of income, 24.8%

900,000 to 1,400,000; 35%; tax on this level at $1,400,000, $175,000; total tax as a percentage of income, 28.5%

1,400,000 to 3,500,000; 42%; tax on this level at $3,500,000, $882,000; total tax as a percentage of income, 36.6%

3,500,000 to 5,000,000; 47%; tax on this level at $5,000,000, $705,000; total tax as a percentage of income, 39.7%

5,000,000 to 10,000,000; 53%; tax on this level at $10,000,000, $2,650,000; total tax as a percentage of income, 46.3%

10,000,000 to 15,000,000; 65%; tax on this level at $15,000,000, $3,250,000; total tax as a percentage of income, 52.6%

15,000,000 to 25,000,000; 75%; tax on this level at $25,000,000, $7,500,000; total tax as a percentage of income, 61.5%

Over $25,000,000; 80%

These taxes are cumulative. Add up the taxes at each level for the total tax paid.


See? It’s easy. Every American pays exactly the same rate of tax, at every level. I’m not an expert, so the numbers would have to be juggled to make up the necessary income, but I think something like this would be close. I think we could do away with all deductions and just take these simple numbers off of the gross. No exemptions, no joint returns, everyone pays as an individual. "Income" would be income from any source, wages, investment income, capitol gains, whatever. If you received it, and you could spend it, it was income.

Here’s how it looks as total tax paid (income; tax paid):

$15,000; pay $0

$30,000; pay $750

$45,000; pay $2,100

$75,000; pay $5,700

$125,000; pay $13,200

$225,000; pay $32,200

$375,000; pay $66,700

$600,000; pay $127,450

$900,000; pay $223,450

$1,400,000; pay $398,450

$3,500,000; pay $1,280,450

$5,000,000; pay $1,985,450

$10,000,000; pay $4,635,450

$15,000,000; pay $7,885,450

$25,000,000; pay $15,385,450

Do those sound like fair contributions to the nation’s wellbeing? I think it all comes in lower than the marginal tax rates of the 1950’s. Of course there’d be other taxes, state and local taxes, some sales taxes, property taxes, import taxes, estate taxes. The above are suggested Federal Income Taxes.

Taxes are not evil. They are necessary to the running of any country. Who pays what is a question of fairness. I believe that Americans possess an innate sense of fairness, a sense of fair play. Would that our politicians still shared that sense.