Thought Bubble

The Congressional Budget Office assesses potential changes in the tax code. It is not really a transparent process. For those who agree that there should be a balanced budget, there is not an agreement on how to balance it. Cuts or spending? Whatever, lets see what the lobbyists say. Nooo! Not that I expect any sort of answers, and just for fun between friends, I wonder what the effect of a flat rate tax of all income of twenty percent would be? There would be a standard personal deduction of fifty thousand dollars, and no other deductions.

It would simplify tax code, and save money filling out the forms. Of the twenty percent, ten percent would be for social programs. The other ten percent would be to run the government.

The same twenty percent would also apply to business earnings. I think that there would still be lots of rules on business deductions. Not sure how that would all work out. If I work, I expect health care from my employer. So I would have to expect that would be a business expense for my employer.

Not that I am suggesting such a thing, just curious on what the potential effect would be.

[ note: see comments for responses ]


2 thoughts on “Thought Bubble

  1. I wonder if 20% would be enough? We’ve talked about a 15% national sales tax. If done right it would capture the lower half of us who don’t pay any income tax now. And Social Security must be preserved because so many people depend on it. It needs to be re-indexed to account for the much longer people are living though. Is your $50K per person or family. Would that give a family of four $200K deduction?


  2. Raising kids is expensive! So the answer is yes. I picked a standard deduction that is above the median income. That way it would pass as the majority of people would like it. It also leaves room for aspiration. The ten percent was biased on the standard rate of tithing.

    So we come to the eternal question, raise taxes more, or reduce spending. We just don’t know the basics, or at least I don’t. In other words how would simple changes affect the bottom line. What would happen if the proposed standard deduction was cut in half? Or rates were to become proportional to income. Would people understand even if we knew?


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