Forum Post: The Progressive Tax that Lowers The 99.9% Taxes

This tax system was proposed by a user of this forum named LogTax:

His explanation of it can be found here - http://www.scribd.com/doc/72320709/Log-Tax

it assumes a scrapping of the entire current system, and replace it with this...

The formula - tax_rate = R * log_10 ( income / poverty)

R is a constant, found by the following formula -

R = desired_tax_revenue / SUM( ( log_10(income / poverty) * income ) )

where the sum is over each individuals income.

Now some calculations!

For the the last budget, 2.7 trillion was raised in revenue. Using a income distribution, R = 8.33

Using this R, and poverty = 11,161

at 11,161 - taxed at 0%

at 100,000 - taxed at 7.9% - take home 92,000

at 1,000,000 - taxed at 16.3% - take home 840,000

at 10,000,000 - taxed at 24.6% - take home 7.5 million

at 100,000,000 - taxed at 32% - take home 78 million

at 1 billion - taxed at 41% - take home 590 million

at 45 billion - taxed at 55% - profit 20 billion [exxon profits, the local maximum tax]

What would it take to pay off the entire US debt and future deficits for the next 10 years

assumptions - deficits stay constant, incomes/profits stay constant, poverty income constant

R = 12.4

at 11,161 - taxed at 0%

at 100,000 - taxed at 11.8% - take home 90,000

at 1,000,000 - taxed at 24.2% - take home 750,000

at 10,000,000 - taxed at 36.6% - take home 6.5 million

at 100,000,000 - taxed at 49% - take home 50 million

at 1 billion - taxed at 61.4% - take home 450 million

at 45 billion - taxed at 81.9% - profit 9 billion [exxon profits, the local maximum]

lets say the maximum tax rate is 100% (an extreme)

maximum profit before hitting that amount is 1.29 trillion with R = 12.4

at R = 8.33, it is 1000 trillion ... so it is unlikely anyone/company ever reaches that

for some comparison, the top tax rate in the 60's was 90% (approx.)

R = 12.4, income to be taxed at 90% would be 200 billion

R = 8.33, 70 trillion