Flat Tax Cut - A twist on Dubyah's tax cut proposal
Ted Schaefer
10/22/00

 

This is a twist on Bush's proposed tax cut. Bush insists that a tax cut should be for everyone - rich and poor. I agree. However, I would take the tax cut, divide it by the number of tax payers and give everyone the same amount. That's fair, isn't it? Let's call it the Flat Tax Cut (FTC).

Here's how FTC it would contrast with Bush's plan of $460 billion over 5 years:

According to Bush's web site, Someone making $500,000 in a 39.6% tax bracket would pay $198,000 before Bush. Under Bush they would be taxed at 33%, experiencing a $33,000 Bush-break. A person earning $50,000 currently pays $14,000 at 28%. At 25% under Bush, they would get a $1,500 break. This is a 22:1 ratio (33k/1.5K) as compared to a 10:1 income ratio. (Someone said Bush favors the rich, looks like they are right.)

Under FTC, $460 billion in 5 years = $92 per year. There are 123 million tax returns filed in 1998. $92B/123M = $748 for everyone - Completely equal and fair.

Actually before I did the math, I was hoping that everyone would get a $5000 break. I guess this suggests that there are a lot of low income folks. So, let's see how this plays for the 15% bracket that Bush wants to lower to 10% - a single parent making $10,000. Currently that person would pay $1,500. Under Bush would the low income tax payer would pay $1000. Under FTC they would pay $1500-748 = $752. This is about 1 month's wages for someone making $10,000.

If you give a $33,000 break to a person making $500,000, what does it mean to the economy, person and family? If you cut by half the taxes of a person making $10,000 the money flows back into the economy and has a positive impact on the person.

- Ted

 

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