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Forum Post: Simplest Suitably Progressive Tax: R*log(Income/Poverty)

Posted 3 years ago on Nov. 10, 2011, 11:07 p.m. EST by LogTax (71) from Swifton, AR
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My attempt to come up with the simplest possible tax surprised me with what I call the log tax: R*log(income/poverty), which could be the entirety of our federal tax forms. Our current system is a clumsy, complicated and compromised approximation of a progressive tax, created for an economy that was orders of magnitude smaller. It turns out to be much more efficient, and shares the burden in a much more fair way, to use a simple, smooth curve instead.

R stands for revenue, and is the multiplier you need to replace all federal revenue. This year spending is 3.7 trillion, and to pay for that, R would be 8.83. This means if you multiply your income by 10, you add 8.83 to your tax rate. At poverty level, $11,161 right now for singles, you pay no taxes. Lower income levels pay taxes so low as to perhaps make tax subsidies entirely unnecessary. At $111,610 income per year, you would be paying a 8.83% tax rate, including SS, Medicare, the whole shebang. This turns out to be a huge tax cut for pretty well everybody below a 25 million income. It would reach 58%, if Exxon had to pay taxes on its record 45 billion profit this year. But the average business would be paying a rate lower than the lowest current corporate rate.

And it's very simple: it can fit on a bumper sticker, and that could be your tax form. You still have to work out your income, but then you divide it by 11,161, hit log on the calculator, multiply by 8.83, and that's your tax rate. A side effect of sharing taxes out with one, simple, fair rule is that when we debate about how much to spend on various things, each of us will be easily able to calculate exactly how much it would cost us, personally, and we'd have a much more solid, democratically suitable basis for those considerations, simply because of the clarity of the system.

  • So far, just about everybody who's looked at this tax system has liked it, including the flat-taxers. I have a more thorough writeup, with discussion of my methods and a very nice chart, here: http://www.scribd.com/doc/72320709/Log-Tax . I'd love to see this idea spread; conversely, if you know why it won't work, I'd appreciate hearing that too.