Tax data review – when considering a Flat Tax
I’m not exactly certain what this means, but I figured I’d put the data out for you to discuss. This is data from the 2009 tax year, the last available from the IRS.
During that year, the federal government collected about $866 billion in taxes from individuals.
There are different ways they list income. First, for all returns, the adjusted gross income (AGI) less deficit was $7.626 trillion. For taxable returns, the AGI less deficit was $6.778 trillion. For taxable returns, the taxable income was $4.861 trillion. (I’m not sure what “less deficit” means.)
If you based a flat tax on the AGI for all returns ($7.626 trillion), you’d need to collect 11.35 percent across the board to come up with the same $866 billion.
If you base it on taxable returns, AGI ($6.778 billion) you’d need a flat tax of 12.77 percent to come up with $866 billion.
If you base it on taxable income ($4.861 trillion) you’d need a flat tax of 17.8 percent to come up with $866 billion.
I’m really comparing apples to apples here (I think) since we’re not including payroll taxes or corporate taxes here. Nor are we discussing other revenues going to the federal government, or federal expenditures. This is just data for individuals, what was collected as compared to what was made.
Discuss.
15 Comments
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Without a budget, it does not matter.? How can one truley keep score if you canot account for expenditures? The “Tax Law” and subsequent accounting is ridiculous.? Would capitalism exist without a budget?? No, companies that spend too much would be out of business because they would not be able to pay vendors, employers, etc.? It would be unbelievable to have a flat tax (I think 15% would be adequate), but I am sure that there are more than a few large accounting firms, IRS Employees, Etc, giving money to PACs to lobby. that would be the demise of the accounting industry.
Bingo, IamTheMapGuy!! But never mind. Fans of the flat tax on this blog are legion, and they like to fantasize. But then, by bringing up something that will not happen, they can avoid dealing with reality.
Hang on here folks. Did you read the post? I specifically said I was just putting this information out there for review, and noted I was not looking at the expense side of it. I found running that data interesting, that was all. But I expected someone out there to jump to the conclusion that this was a push for a flat tax, and you fell for it.
Yes, I read the post.
WhileI agree this appears to be apples to apples, I think there are some things being left out.? This data does not look like it takes into account deductions that everyone seems to allow for in their plans.? Also, I’m under the impression that certain income levels may still not be taxed.? Running the numbers with these factors involved may be interesting.? As for the buget, I think it’s seperate issue.? We are talking simplification of a convoluted system.? The tax system applies with or without a budget.
The whole purpose of the tax system is to feed the expenses of this nation.? Taxes are the vehicle to pay for these expenditures.? Without a budget, e.g. money going out, how can we speak to taxes?? If the Gov ran leaner, there would be no reason to collect more.? As Steve likes to say, “symptons of the disease”
If?people really wanted to change the tax system, we should do away with any withholding, taxes on goods and services, SS and all the other things we have become numb?to and have people write out quarterlies like owners of business do.? Receive your WHOLE Paycheck and then start getting the sick feeling April 15, June 15, September 15 and January 1, right after Christmas which is my favorite.? This would certainly accelaerate the discussion.
EXACTLY!? But that falls under sammy’s manifold “ain’t gonna happen” file, as people would be forced to see real bill they are footing, and would rebel every quarter when the bill came due.
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I would love to see that happen, even if only for a year.
An inscrutable tax code yields inscrutable data.? All it shows me is that government is spending well beyond its means.
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One thing a flat tax would give us is “taxable income” vs. AGI, taxable vs. untaxable income etc., etc., etc.? At least the data would be manageable.
Right,20% of AGI.
If we must have an income tax, let it be a flat tax due on the first Monday of November, payable by personal check, not through withholding.? Every national election should be a referendum on any tax increase, should one be proposed by the sitting congress.
Adjusted income is a scam.? Let the tax be on all income with no deductions except charitable ones with some low level exemption for low income earners.? Deferred income taxes would be paid when the income is granted, not when the deferred income is taken.
Some sort of consumption tax would tax those who have income from illegal means or those whose incomes are derived from cash only businesses with questionable accounting.? This too should be subject to referendum.
This might not be “fair” but it is equatable, putting everyone’s skin in the game.? It’ll never happen.
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PV is the guy who thought this through.
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(I?m not sure what ?less deficit? means.) either,but the 20% would be applied to the first figure less whatever the individual deduction is. I think twice $12,500 & $5,000 per dependent would be more in line with $866 billion. How many people were those figures from(filers + dependents)?
A flat tax is a good idea. It’s better than having a tax code that is yards thick and inscrutable. Having everyone pay taxes is a better idea, to me. Deductions? Argue about them, but I think that NO deductions is best. Everyone pays a fair share equally. You earn the money, you pay your tax. What you do with your money is your business. Isn’t that what this dynamic experiment called democracy is all about?
I definitely have taxphobia, I think I finally understand the terms. I really appreciate this exercise, it will make it easier for me to understand the GOP candidates attempts to simplify the tax code. However, I would love to have someone on Jim’s show explain the “less deficit”. Is that like when I buy a 50 foot sailboat and I don’t have the money, but I can? just take the cost off my taxable income? Sailboat = less deficit
Steve, don’t bother. Our Congressional delegation doesn’t know what it is or “never heard off” (or don’t understand the concept) Flat Tax. Just ask Chris Murphy. I did 3 years ago at public meeting and that’s exactly what he claimed.