The following is an example of a flat tax that would tax people earning under $100,000 less and those earning over $250,000 a little more while producing the same revenue for government.
1) No income taxes would be paid on the first $40,000 worth of earnings for a family of four. The rationale is that income needed for food, clothing, shelter and other essentials should not be taxed.
2) Income over $40,000 would be taxed at 22%.
3) Social security deductions would not be limited to the lower incomes. People earning millions a year would pay 15% social security on their income. The total deductions for the opulent are now 33% a year. Under this proposal, the opulent would pay a total of 37% (22% plus 15%). The opulent would pay 4% more per year.
4) Those earning under $40,000 a year would continue to pay social security as they do now. The social security contributions they give plus the matching contributions of their employers would be compounded at the rate paid on T-Bills or other government securities.
5) Those earning $80,000 a year would pay taxes at an average rate of 11% (0% on $40,000 plus 22% on the next $40,000). They would contribute to social security as they do now. Their tax rate would decrease slightly.
6) Social Security benefits for the opulent would be capped. The extra money they contribute would fund social security for the poor. The middle class should be relieved of the burden of sharing their social security with the poor.
This tax scheme is simple and would raise more revenue than the current tax and social security scheme. The tax rates would be about the same. Social security benefits for the middle class would be higher. Tax forms would be simpler.
Unfortunately, if the American government turned these few words into law, several thousand pages would result.