2004-02-03T13:53:00.000-08:00

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What Makes More Sense: Flat Taxes or Redistribution of Wealth?

Greetings!

Disputations asked about the fairness of my distributive or progressive tax schemes in terms of social justice. The idea is to tax the rich higher percentages than the poor.

In an unrelated blog posting, Steve Bogner even went so far as to threw a bunch of figures together to show in graphic terms that the Bush tax cuts are a larger percent for the poor than they are for the rich.

I did some google searches to dicover what current tax percentages for each class are today, and found a helpful chart on the bottom of this article: Moving Toward a Flat Tax. I then went to the CIA figures on U.S. population, which is listed at 290,342,554. Combining the data, I present below three tables combined into one using frontpage editor. I hope this works (never tried this type of coding before). I also hope it is clear enough. If it's not clear, I hope you can get enough of the idea to try using the table in the article link to create an Excel sheet yourself, and see if your don't get similar results.

The top table indicates Bush's 2001 tax in each income bracket according to the article. I then project the amount of revenue generated in each class based on the population size and average income for each group, displaying each groups average tax per person as part of the calculation. The final number below each set of quintiles represents a total.

In the middle portion of the table, I calculate what a flat tax would look like to generate as close to the same revenue as Bush without going under Bush's budgeted revenue. The closest I could come was a 33.09% tax, which really socks it to the poor if we are to keep current services. I show just how much each group changes per person and as a group. Again, I total the sum and compare it to what Bush would bring in.

We can see this is grossly unfair to the poor, and may actually cause people to go without basic necessities. If I did this right (I'm no economist), it should decisively shut down any notion of a "flat tax".

Then, in the lower portion, I show what it would like if I were aiming for Bush's estimated revenue by increasing the top quintile 2 points each over the surrent Bush numbers, and decreasing the bottom four quintiles by the same 2 points from Bush's current plan (I'm giving more back to the middle class than Bush, and if I did my math correctly, it does work, and even brings in a little more revenue than Bush).

Since the wealthy become wealthy on the backs of the poor, I would argue this is the general direction we should be headed. I presented Disputations arguments for the ethics of this that can be summarized in paragraphs 1938 and 1947 of the CCC.

I hope all this makes sense. Try plugging the numbers in Excel or Lotus, and play with them yourself (maybe I made a mistake - I'm not an economist, and don't claim to be a math wiz):

Total Population	290,342,554	Average income	2001 Tax with Bush cuts	Per person avg Tax	number of people in group	average revenue
Quintile 1	Top 1 Percent	$1,028,000	41.70%	$428,676	2,903,426	$1,244,628,846,785
Quintile 1	Next 4 Percent	$204,000	35.80%	$73,032	11,613,702	$848,171,896,149
Quintile 1	Next 15 Percent	$96,200	34.70%	$33,381
43,551,383	$1,453,806,139,814
	Quintile 2	$56,100	31.90%	$17,896	58,068,511	$1,039,188,262,426
	Quintile 3	$34,300	28.50%	$9,776	58,068,511	$567,648,727,325
	Quintile 4	$20,700	24.20%	$5,009	58,068,511	$290,888,398,002
	Bottom Quintile	$9,400	19.40%	$1,824	58,068,511	$105,893,736,295
					Total	$5,550,226,006,796

Total Population	290,342,554	Average income	Flat Tax	Per person avg	number of people	average revenue
Quintile 1	Top 1 Percent	$1,028,000	33.56%	$344,997	2,903,426	$1,001,672,520,338
Quintile 1	Next 4 Percent	$204,000	33.56%	$68,462	11,613,702	$795,101,922,759
Quintile 1	Next 15 Percent	$96,200	33.56%	$32,285	43,551,383	$1,406,044,208,996
	Quintile 2	$56,100	33.56%	$18,827	58,068,511	$1,093,265,143,793
	Quintile 3	$34,300	33.56%	$11,511	58,068,511	$668,431,273,300
	Quintile 4	$20,700	33.56%	$6,947	58,068,511	$403,397,299,047
	Bottom Quintile	$9,400	33.56%	$3,155	58,068,511	$183,185,246,910
						$5,551,097,615,143

Tax difference	Top 1 Percent	decrease	-20%	-$83,679		-$242,956,326,447
	Next 4 Percent	decrease	-6%	-$4,570		-$53,069,973,390
	Next 15 Percent	decrease	-3%	-$1,097		-$47,761,930,818
	Quintile 2	increase	5%	$931		$54,076,881,368
	Quintile 3	increase	18%	$1,736		$100,782,545,974
	Quintile 4	increase	39%	$1,938		$112,508,901,045
	Bottom Quintile	increase	73%	$1,331		$77,291,510,615
						$871,608,347

Total Population	290,342,554	Average income	Jcecil3 Tax	Per person avg	number of people	average revenue
Quintile 1	Top 1 Percent	$1,028,000	43.70%	$449,236	2,903,426	$1,304,323,275,887
Quintile 1	Next 4 Percent	$204,000	37.80%	$77,112	11,613,702	$895,555,800,962
Quintile 1	Next 15 Percent	$96,200	36.70%	$35,305	43,551,383	$1,537,599,000,899
	Quintile 2	$56,100	29.90%	$16,774	58,068,511	$974,035,393,308
	Quintile 3	$34,300	26.50%	$9,090	58,068,511	$527,813,728,917
	Quintile 4	$20,700	22.20%	$4,595	58,068,511	$266,848,034,530
	Bottom Quintile	$9,400	17.40%	$1,636	58,068,511	$94,976,856,264
						$5,601,152,090,768

Tax difference	Top 1 Percent	increase	5%	$20,560		$59,694,429,102
	Next 4 Percent	increase	6%	$4,080		$47,383,904,813
	Next 15 Percent	increase	6%	$1,924		$83,792,861,084
	Quintile 2	decrease	-6%	-$1,122		-$65,152,869,118
	Quintile 3	decrease	-7%	-$686		-$39,834,998,409
	Quintile 4	decrease	-8%	-$414		-$24,040,363,471
	Bottom Quintile	decrease	-10%	-$188		-$10,916,880,030
						$50,926,083,972

Peace and blessings!
jcecil3

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Readers may contact me at jcecil3@attglobal.net

In Defense of Progressive Taxes