The “Dennis” tax plan

People and taxes

Take 5 fictitious people – any race, creed or color – just generalizations.

All educated and single – no dependents
All have an apartment(shared)
Each pay $500 / month in utilities and rent (cheap)

Taxes
https://www.tax-brackets.org/federaltaxtable
https://www.tax-brackets.org/connecticuttaxtable

 

Timmy
Age 25
Works at fast food
Associates degree
Earns $10 / hour = $20,800 per year

Tommy
Age 25
Works at machine shop
Technical school
Earns $25 / hour = $52,000 / year

Tammy
Age 25
Works in Marketing
Bachelor’s Degree
Earns $50 / hour = $104,000 / year

Toni
Age 25
Works in finance
Bachelor’s Degree
Earns $100 / hour = $208,000 / year

T-Bone
Age 25
Works as a Landscaper
High school equivalency
Earns $500,000 / year

Current tax system

https://www.tax-brackets.org/federaltaxtable
https://www.tax-brackets.org/connecticuttaxtable

Name Salary Tax rate fed Tax fed Tax rate state Tax state Net Salary % of salary keep
Timmy 20,800 15% 3,120 5% 1,040 16,640 80%
Tommy 52,000 25% 13,000 5.5% 2,860 36,140 69.5%
Tammy 104,000 28% 29,120 6% 6,240 68,640 66%
Toni 208,000 33% 68,640 6.5% 13,520 125,840 60.5%
T-Bone 500,000 39.6% 198,000 6.99% 34,950 267,050 53.4%

As you earn more, you keep less – the incentive is to show a lower income, cheat the system – only way to get ahead and keep more of your $$

Tax revenue:
Fed = $311,880
State = $58,610

This is totally insane right here: -> For federal rate – 416,700+ pays 35% – whereas 418,400 pays 39.6% – so if I earn a little bit more, I get hit with an additional 4.6% tax – why should I be honest and report – this sets people up to cheat and try to earn less – whether reality or “creative accounting”.

This system penalizes you (takes a greater % of your money) as you grow in salary and success. – Bad JuJu…

 

Flat Tax

Reduce all tax (total by 5% – cut all by 5% – period) –  hey the economy is tough, need to cut back, right?

Total from above (adjusted)
Fed = $296,286      State = $55,680
Total salaries = $884,800

Need 33.5% of total salary for Fed taxes = $296,286
Need 6.3% of total salary for state tax = $55,680

This is “just what it is” no getting around the numbers.

Flat tax – no incentive to climb – incentive to “cheat” system to save $$

Name Salary Tax rate fed Tax fed Tax rate state Tax state Net Salary % of salary keep
Timmy 20,800 33.5% 6,968 6.3% 1,310 12,522 60.2%
Tommy 52,000 33.5% 17,420 6.3% 3,276 31,304 60.2%
Tammy 104,000 33.5% 34,840 6.3% 6,552 62,608 60.2%
Toni 208,000 33.5% 68,680 6.3% 13,104 126,216 60.2%
T-Bone 500,000 33.5% 167,500 6.3% 31,500 301,000 60.2%

Fed = $295,408  State = $55,742

Dennis Tax

Adjust rates for a descending scale – reward success – no incentive to cheat system, the less I make the greater % I pay in, keep less % wise

Name Salary Tax rate fed Tax fed Tax rate state Tax state Net Salary % of salary keep
Timmy 20,800 40% 8,320 7% 1,456 11,024 53%
Tommy 52,000 39.5% 20,540 6.75% 3,510 27,950 53.75%
Tammy 104,000 39% 40,560 6.5% 6,760 56,680 54%
Toni 208,000 38.5% 80,080 6.25% 13,000 114,920 55.25%
T-Bone 500,000 38% 190,000 6.0% 30,000 280,000 56%

Fed = $339,500 = surplus over original by $27,620 -> Put towards education credits for earners less than 50K, other assistance? Can give Timmy a $5,000-housing allowance – and still be over budget by +20k

State = $54,726 – need to tweak the numbers a bit. You get the idea…

The more you succeed the more you will pay – no getting around that – BUT!!  The more you earn the more of YOUR money percentage wise – YOU GET TO KEEP…

Little reason to cheat the system – you want to show the higher earnings and keep the greater % of your money..

 

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