Tuesday, March 11, 2008

How to make a progressive income tax

The current method of making an income tax progressive--having everyone record their income, deduct a variety of things, and then figure their tax from a table--is terribly inefficient. To create an efficient income tax, you can simply borrow an idea from the Fair Tax proposal. Every source of income is taxed up front. It's taken off the top and sent in. Every citizen then gets the same, standard refund of the tax up to a certain level. If the income level was set at $20,000, with a tax rate of 15%, the tax would be $3,000, and the standard refund would be $3,000. Thus a person earning $20,000 would have a tax rate of zero. Earning $40,000 would create taxes of $6,000 and a refund of $3,000, for a tax rate of 7.5%. And so on. No one would have to file a return, or save their receipts, or go through all that hassle. Simplicity is good.

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