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> Once you have accepted that progressive taxes are acceptable. . .nobody can argue with a straight face that a 10 line table is too complicated. First, I don't think anyone should pay taxes on their labor. And just because my labor makes more shouldn't mean I pay a higher percentage; so, no, I don't agree with the concept of progressive taxation on labor. Regardless, that's what we have. Anyway, 10% after $50,000 is dead simple. e.g. make $120,000 as a family, take away $100,000, left with $20,000, I pay $2,000. Real tax rate is only 1.6%, so maybe that's too nice for the American family? You can change it to 15% after $25,000 and it's still simpler. $120k-$50k=$70k x .15=$10.5k or 8.75% real tax rate, all without worrying about IRAs, 401ks, HSAs, etc. With a 6-12 tax brackets with crazy amount of deductions, I need to: 1) calculate taxable income. This is some func of deductions. i.e. standard deduction ($25k) + max 401k ($20k) brings taxable income to $75,000. There's other deductions such as IRAs, HSAs, 529, etc; all with their own maxes based on various criterias and income, which has it's own list of gotchas that screw over people. Hopefully you didn't forget a deduction on top of all that. 2) Now determine tax rate. 22%. Feels bad, but whatever -nearly a quarter of your income (nominally, at least) to finance the debt to keep inflation going. The graph says ~$4,800+22% of anything over ~$42,000. Alright. So $4,800+(22% x $33,000)=$12,060 are taxes owed. 3) Now determine your credits, if any. Such as a child credit. I hope you know your credits, because you might've forgot about a tax credit for something you bought. Let's assume you know you get $3600 for a toddler, and put that in. Now your $12,000 is $8,400. 4) Ensure your paid taxes is correct. You paid throughout the year, adds up to ~$8000. So taxes due are now $400. 5) Now you go to pay $400. Welp. Now you need to pay $50 because you decided you wanted to buy a stock that gave you $10 in dividends in a brokerage account, and now you can no longer free file. But you don't want to be audited, so you report the $10 and pay the $50. Yeah, that's very simple and straight forward. But good news is the actual tax rate is actually only 7%, even though you felt like you just paid nearly 22%, wasted hours of your life, and were insulted with an additional fee just to pay your taxes. |
None of your steps are made more complicated by more brackets or less complicated by fewer brackets. You determine your taxable income (the complicated part), then lookup that taxable income in the tax tables (simple).
If the taxable income is low enough, there is a table with a large number of entries that each cover a small enough range that you don't even have to do any computation. You just find the line that covers your taxable income and the table tells you the tax.
If your income is too high for that table you have to use a smaller table with entries that cover larger ranges. That table currently has 4 entries. You find the row whose range includes your taxable income, and calculating your tax involves a multiplication and a subtraction--which is just as much work as calculating your tax under your proposed two bracket system for people whose income is high enough to be in the second bracket.