There is no circumstance where earning more gross means taking home less net. It encourages people to make informed decisions about what the value of their time is, and if it encourages people to work less overtime, this creates an opportunity for more employment to fill the void.Īnd if you want more income, working more is still totally an option. If what you mean is their net income per hour is reduced beyond a certain number of hours worked, sure. You would actually be paying more under a flat tax system, than you do now, especially if you take any deductions, have kids, mortgage interest, retirement accounts. This gives you an effective tax burden of 17.18%. Using and taking no deductions, you still get a refund of $2494. Tax table states your burden at 4991 plux 25% of the excess over 36250. Going to use you as an example (assuming single, head of household, 80k a year income for simplicity). In the current structure your tax burden is your income tax deduction minus your tax credits, which you apply for during your tax return filing each year. In a flat tax structure your income tax deduction *is* your tax burden. Of course in reality, people with higher incomes often tend to have lots of deductions as well, which would change the calculations, but the basics are that you'd pay less taxes across society on average, not more.Catch is in that last line: you take tax credit deductions to reduce your tax burden. There is no tax bracket that doesn't have lower taxes under this scheme, assuming only the standard deduction. The saving just go up the more income you have, assuming just the standard deduction. If we went to a 25% flat tax with a $25,000 standard deduction, the tax I'd pay would be $13,750. Under the current system with the $6100 standard deduction, I pay $14403.75 in non-payroll income tax.
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