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A flat tax of 17% on incomes would not net the government 17% of GDP. The flat tax would have to be much higher (close to 2x) to achieve that same income.
by harryh 8y ago
A flat tax of 17% on incomes would not net the government 17% of GDP. The flat tax would have to be much higher (close to 2x) to achieve that same income.
- spullara 8y agoWhy? Looking at a sample year, like 2011, you find that total personal income was $13T, the GDP was $15.5T and total tax revenue collected was $2.3T. Probably need some more data to tease out corporate vs personal tax revenue but I don't think it will be too far from a ~20% effective tax rate to reach the required revenue.
- harryh 8y agoMost flat tax proposals include a fairly generous deduction so the tax only starts above a certain level of income. That pushes up the % a lot. I agree that if you start the flat tax on the first dollar of income, then it doesn't have to be so high.
- spullara 8y ago97% of federal income taxes paid are by people in the top 50% of income today (above 36K, as of 2012), you would probably have to at least match that. Given that, I think I agree. It would have to be 34% for the bottom 50% to pay nothing.