A New Tax Proposal
by Moe White –
Donald Trump recently released a tax reform proposal—a one-page bullet-point wish list—that would take money out of your pocket and put it into his. In response, here is my proposal, which would do the opposite.
There will be seven income brackets for both individuals and families). Adjusted Gross Income up to each dollar level is taxed at that lower rate, for billionaires and minimum-wage workers alike. Income above that dollar level is taxed at the next higher rate.
Tax Rate ….. Adjusted Gross Income For an Individual / For a Family
5% on every dollar ….. up to $25K (individual) / $50K (family)
(The first $25,000 you make, after all deductions and exemptions, would cost you $24/week in taxes—a total of $1,250).
10% ….. above $25K up to $50K / above $50K up to $100K
(The first $25,000 is STILL at the 5% rate; the next $25,000 is at 10%.)
15% ….. above $50K up to $100K / above $100K up to $200K
25% ….. above $100K up to $200K / above $200K up to $500K
35% ….. above $200K up to $500K / above $500K up to $1M
50% ….. above $500K up to $1M / above $1M up to $5M
65% ….. above $1M up to $5M / above $5M up to $10M
75% ….. all income above $5M / above $10M
To calculate adjusted gross income, a taxpayer would deduct, from total earnings:
- $25,000 for each child under 18 and for adult children or other dependents (elderly parents, etc.) living at home;
- the mortgage interest on one primary residence; OR 1/2 of that amount for renters for a primary residence
- all documented medical expenses not covered by insurance
- all costs of education at an accredited school, college, or university through Masters level
- deductions to legitimate charitable 501c3 organizations that do not engage in partisan political activities, up to 25% of total gross income
So, let’s say a married couple with one 16-year-old child grosses $150,000 this year. First, they deduct $25K for their child, leaving $125,000. They own a $250,000 house—the median value for their state—and pay $1,380 a month for the mortgage: for the year, their interest on the mortgage totals $12,000, leaving $113,000. Their $2,000 in dental care isn’t covered by insurance, and they paid $3,000 in medical exclusions (out-of-pocket costs), leaving $108,000; and one spouse is working to earn a masters degree, which cost her $8,000 for the year, leaving $100,000. They gave $200/month to their church and another $600 to other charities, leaving $97,000 as their Adjusted Gross Income.
So, the first $50,000 is taxed at 5%: they owe $2,500. The next $47,000 is taxed at 10%: they owe another $4,700. Total tax bill: $7,200, or 7.2% of AGI, which turns out to be about 5% of their original (unadjusted) gross earnings of $150,000. Withholdings from their paychecks would total $600 a month.
In comparison, let’s assume—as he claims—that Donald Trump earns $350,000,000 a year (from various licensing deals, schemes, graft, and corruption). He gives away a total of $1,000 to charities (his youngest child’s school endowment), nothing to any church, he enjoys free medical and dental care from taxpayers, and he’s entitled to deduct $25,000 for his one child living at home and the mortgage interest on a primary residence—not the triplex at Trump Tower, which has no mortgage, as he owns it outright, and not the White House, which he does not own but is his primary residence. So his total deductions are $26,000, leaving an AGI of $349,074,000.
His tax bill starts off identical to the other couple outlined above: $2,500 on the first $50,000 of income. And, like anyone else, for the next $50,000, he owes 10%, or $5,000 more. A total of $7,500 on his first $100,000 of adjusted gross income, or 7.5% of AGI.
For the next $100,000, Mr. Trump owes 15%, or $15,000; for the next $300,000, 25%, or $75,000; for the next $500,000, 35%, or $105,000; for the next $4 million, 50%, or $2,000,000; for the next $5 million, 65%, or $3,250,000; and for the rest—for the remaining $339,074,000—he owes 75% in taxes, or $254,305,500.
That means that Mr. Trump would pay $259,758,000 on a gross income of $350,000,000, an overall tax rate of 74%. So while his gross income is 2,333 times as large as the other family’s, his tax rate is only 10 times as big. What a bargain! And that tax rate would leave him a paltry $90,242,000 to support his wife and son.
Try as I might, I can’t think of a single person I know who would find it hard to survive on $90 million a year. Can you?
I like my tax proposal. It’s how I would truly Make America Great Again.
Facts From The Front is a monthly column by copy editor Moe White in which America’s Constitutional democracy is defended against ongoing assaults by those who prefer less palatable alternatives: oligarchy, autocracy, theocracy, feudalism, fascism, and other nondemocratic methods of government. Among the qualifications for White’s commentary and ridicule are hypocrisy, dishonesty, corruption, unbridled greed, flat-out lies, and sheer idiocy on the part of public figures.
NOTE: The views and opinions expressed in “Facts from the Front” are those of the author. They do not necessarily represent the views or opinions of The Urban News.