18 - Understanding our Political Economy - improving how govt raises r

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Lesson 18 - Improving how government raises its revenue

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Understanding our Political Economy LESSON EIGHTEEN Improving How Government Raises Revenue

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Distinguishing Between “Earned” and “Unearned” (Rent-Derived) Income

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NATURE

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PROGRESSIVE SIMPLIFIED

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INCOME DISTRIBUTION AS OF 2010 0.01% of us with incomes of $10 million or above 0.10% of us with incomes of $2 million or above 0.50% of us with incomes of $800,000 or above 1.00% of us with incomes of $500,000 or above 5.00% of us with incomes of $200,000 or above

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The income of the top 1% of all households reached an all-time high in 2007 (despite the recession), growing 50% just since 2000

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The top 0.1% of all returns (141,000 returns) reported 12% of all adjusted gross income and paid 20% of all federal income taxes

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FIRST: Exempt all individual incomes up to the national median

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There would be no other exemptions or deductions under the tax code All individual incomes up to $37,500 would be exempt from taxation

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Individuals with special hardships would apply for assistance from the appropriate social welfare agencies Above $37,500 higher ranges of income would be taxed at increasing rates – sufficient to balance the federal budget

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AND CLIMBING!

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Congress would set the tax rates and ranges of income subject to each rate This would be done as part of the budgeting process An objective would be to raise sufficient revenue to balance the budget The national debt would be gradually retired

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The income ranges and tax rates might look as follows. For incomes: Greater than $37,500 up to $75,000: 5% Greater than $75,000 up to $150,000: 10% Greater than $150,000 up to $300,000: 15% Greater than $300,000 up to $500,000: 20%

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For incomes: Greater than $500,000 up to $1 million: 25% Greater than $1 million up to $5 million: 30% Greater than $5 million up to $10 million: 35% Greater than $10 million up to $25 million: 40% and so on…

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Exempt small businesses from the tax base Replace the business profits tax with a low, graduated rate of taxation on gross revenue

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Business revenue up to, say, $500,000, would be exempt from taxation Revenue greater than $500,000 up to $2,000,000 would be taxed at 1% Revenue greater than $2,00,000 up to $5 million would be taxed at 1.5% Revenue greater than $5 million up to $25 million would be taxed at 2.0% And so on…

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In the United States there are 192 million people aged 25 and over

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Some 43% of the work force has an income of $25,000 or less Some 17% of the work force has an income greater than $25,000 up to $37,500

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60% of all working people in the United States would be exempt from federal taxation under the simplified, progressive income tax structure proposed

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The next 44.7 million people have incomes greater than $37,500 up to $75,000 This group would pay 5% on each dollar above $37,500, or a total of around $5.6 billion total in taxes The individual tax bill for someone with an income of $75,000 would be $1,875

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This group would pay 5% on each dollar above $37,500, or a total of around $17 billion Then, 10% on each dollar above $75,000, up to $100,000, for a total of $6.2 billion in taxes The individual tax bill for someone with an income of $100,000 would be $4,375 The next 9 million people have incomes greater than $75,000 up to $100,000

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Missing Income Data

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There are roughly 17.7 million households with incomes at or above $250,000 Tax revenue from these households – in individuals – would total some $180 billion An individual with an income of $250,000 would pay $24,400 in federal income taxes

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TAX RELIEF For PEOPLE WHO PRODUCE GOODS and PROVIDE SERVICES

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TAX the RENTAL VALUE of the LAND held by EVERYONE!

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Only 2.3 million households have incomes above $250,000 Individuals with incomes of $500,000 would pay $71,900 in taxes

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Individuals with incomes of $1 million would pay $196,000 in taxes Individuals with incomes of $5 million would pay $1,396,900 in taxes Some 112,400 households have incomes above $5 million An individual with an income of $10 million would pay $3,146,900 in taxes

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Who Owns the Planet? Who Captures the Rent? It’s Only MONOPOLY!

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END OF LESSON EIGHTEEN

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