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

NameSalaryTax rate fedTax fedTax rate stateTax stateNet Salary% of salary keep
Timmy20,80015%3,1205%1,04016,64080%
Tommy52,00025%13,0005.5%2,86036,14069.5%
Tammy104,00028%29,1206%6,24068,64066%
Toni208,00033%68,6406.5%13,520125,84060.5%
T-Bone500,00039.6%198,0006.99%34,950267,05053.4%

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 $$

NameSalaryTax rate fedTax fedTax rate stateTax stateNet Salary% of salary keep
Timmy20,80033.5%6,9686.3%1,31012,52260.2%
Tommy52,00033.5%17,4206.3%3,27631,30460.2%
Tammy104,00033.5%34,8406.3%6,55262,60860.2%
Toni208,00033.5%68,6806.3%13,104126,21660.2%
T-Bone500,00033.5%167,5006.3%31,500301,00060.2%

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

NameSalaryTax rate fedTax fedTax rate stateTax stateNet Salary% of salary keep
Timmy20,80040%8,3207%1,45611,02453%
Tommy52,00039.5%20,5406.75%3,51027,95053.75%
Tammy104,00039%40,5606.5%6,76056,68054%
Toni208,00038.5%80,0806.25%13,000114,92055.25%
T-Bone500,00038%190,0006.0%30,000280,00056%

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..

 

Please follow and like us:

Leave a Comment





Enjoy this blog? Please spread the word :)