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Tax Plan Analysis

The following tables present a comparison the current tax revenue with estimates of revenue which would be generated by my proposed higher tax rates for adjusted gross incomes over $100,000 and raising of the wage cap for Social Security contributions to $200,000. Data for the current tax revenue (2003) were taken from www.irs.gov as was the number of tax returns by income segment.

In addition to an increase in tax rates on adjusted gross incomes above $200,000, my proposal is for a rate of 40% on long term capital gains. It also calls for the the removal of current loopholes by having the new tax law written as a replacement of all current Personal Income Tax provisions. The long term capital gains and loophole removal effects are not accounted for in the following.

Table 1 My Proposed Tax Schedule

INCOME $	TAX PERCENT
$0 – 200,000	Same as now
$200,000 – 299,999	40%
$300,000 – 499,999	50%
$500,000 – 999-999	60%
$1,000,000 and greater	70%

Table 2 Tax Revenue For Incomes above $200,000 (My proposal)

INCOME RANGE (MILLIONS)	# RETURNS	AVERAGE INCOME ($MILLION)		TAX $ ($1,000)	REVENUE ($BILLION)
10 -	6640	12.0		8,194	54
5 – 10	12,570	7.0		4,694	59
2 – 5	55,412	3.0		1,894	105
1.5 – 2	39,248	1.7		984	39
1 – 1.5	97,863	1.2		634	62
.5 – 1.0	422,340	0.7		314	133
.2 - .5	2,395,116	.32		104	248
				TOTAL	700

			TAX FOR INCOMES BELOW $200,000 (CURRENT)		523
			TOTAL		1223
			TOTAL CURRENT TAX		-748
			NEW REVENUE		475

Table 3 Total Revenue Comparisons

Taxes	Current ($Billion)	My Proposal ($Billion)
Personal Income	747	1223
Corporate Income	230	230
Estate	24	24
SocSec&Medcr	732	845
FairTax	0	0
Total	1733	2322
Difference from Current	0	+589

Table 4 Distribution of Tax Load by Percentage

Income rank	Bottom 90%	Top 10 %	Top 1 %
Income Distribution	57.6%	42.4%	16.7%
Current Income Tax Distribution	34%	66 %	34%
My Proposal Tax Distribution	20%	80%	46%

Table 4 shows the distribution of income and tax load the current and my proposed tax plans. My tax plan increases the burden on the upper two groups and lowers the burden (as a percentage) on the lower 90%. With my plan, the numeric value of taxes on the lower 90% stays the same.