Yup -- for more on that:

http://www.joebageant.com/joe/2010/08/understanding-america.html

What's the federal tax load on an income of $75K for a family of four with a modest home.

It appears that 15% of GDP is attainable and sustainable. While 20% is not. Perhaps we should limit federal spending to 15%. If we kill the corporate tax and pin the 15% to a consumption tax we can eliminate the IRS and the Bog's job as well. More time for blogging.

The cost savings would be enormous.

Require a 2/3's majority to increase the rate and institute an automatic calculation to keep the income at 15% and let the economy go. The lack of goofy fed tinkering would likely be worth its weight in gold.

Mark

David

Not sure what your point is, but if you assume $25,000 in exemptions/deductions and adjustments, and $3,000 in tax credits (child tax credit, child care credit etc) then the income tax liability is about $3,700 or just under 5% of gross income.

Tax revenues are at 15% or so right now, but spending is at 25% of GDP. So we are borrowing 40% of the money the federal government is spending.

So we've shifted the tax burden from businesses and consumers onto wage earners making less than 100k/year by borrowing the SS funds for current spending. And, now the we're told that those funds can' be paid back, so we have to raise retiremtn age or reduce benefits. Seems like all we really have to do is impose a surcharge on investment and dividend income to repay the IOU's in the SS trust account. That should make up for the taxes that haven't been collected for current spending over the past 30 years.

Eyeballing the data it's clear there is a very high correlation between corporate profits and corporate income taxes -- profits were a much larger percentage of GDP at the beginning of the time series (when the world economy was much less competitive) than they are today, just as corporate income taxes were a much higher percentage of GDP than they are today.

The biggest problem is the payroll taxes, which are primarily forced savings plans, flattened out a long time ago while the payments have continued to escalate. Something has got to give.

The time has come for a very simple flat tax. Everyone, over a set poverty level, including the fictional corporate citizens with their individual like rights pays at one rate. And the deductions racket has to go too. Deduct the poverty amount and that's it. Let each and every entity pay its fair share. And if a non-profit holds profit making assets, those assets are taxed (OHSU?).

What's wrong with everyone paying the same percentage of their income? And no re-defining of what is income.