For my GOV. class, about taxes. help please?

Question

Im the senator of NY in mock congress in my gov. class and im trying to create a bill that the tax cuts should be equal for everyone. Can someone help me learn more about this, if we make it equal for everyone, does that mean property tax goes up or sales tax?, what else should be taken into consideration? This is obviously a republican view and its just for my government class so don't get nasty please lol.

Answer 1

To expand on Boston's excellent answer, equal tax cuts is an unachievable ideal. This is because nothing about the calculation of tax is a linear function, so merely reducing the rate by "X% across the board" would not achieve the desired result.

Parts of tax law that make the calculation non-linear: 7.5% and 2% thresholds on Sch A; Credits that reduce tax and are non-refundable; refundable credits, such as the EIC; any tax benefit that is reduced when an AGI ceiling is exceeded, and the calculation of taxable Social Security. THis is but a sampling.

How we arrived at this convoluted abomination known as the Internal Revenue Code is the horse trading that has gone on in Congress trying to make everyone happy.

Raise your hand if you are happy with tax law.

Here's a question to keep you up tonight: Why reduce everyone's tax burden equally when the tax burden is not equal now?

Now, the foregoing statements are limited to Income tax. One could easily expand the conversation and try to make even more people happier by including sales, property, excise and deatgh taxes into the mix. Of course, even if one had the staff to figure out a formula to reduce everyone's overall tax by a given %, it would be incorrect next year due to changes in distribution of income and deductions and factors used to calculate the other taxes.

The entire point of this note is to get you to see that, while the goal is laudible, it is illusory. You may be the one to de-bunk the class' attempt to emulate reality.

Just one man's humble opinion, for what it's worth.

Now, here's a proposal to think about. I DO NOT advocate this, but it is simple. Abolish all current taxes and replace them with a flat sales tax. Exclude certain necessities, such as food, medical needs and housing/utilities. Anyone then can control tax by controlling spending, and thus is not regressive as is an income tax.

One calculates the tax rate % as the amount needing to be collected divided by the total gross state sales subject to tax.
So if the state needs to collect $100B to meet it's budget and the sales tax base is $1 trillion, the rate is .10, or 10%.
Simple.

Good luck! And good question, especially that you showed some thought in how you stated it.

Answer 2

An "equal" tax CUT, as you specify, simply means that the reduction in the rate of tax applies across the board to all taxes and taxpayers.

Answer 3

i do no longer care if a company is benevolent or no longer. they do no longer exist to be benevolent. They exist to furnish a services or products. with the intention to try this, they could desire to create jobs. this is all this is needed of firms. i do no longer care if their income is $5 or $5 trillion; as long as they pay me a honest salary in accordance with my place.