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Author: Monkeylawyer Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: help calculating marginal tax rates Date: 10/10/2000 5:13 PM
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General tax theory note on "flat" taxes: when some level of subsistence income is exempted from tax and then the rest of an individual's income is subject to a "flat" tax, that tax ain't flat, buddy. As the taxpayer's income rises, the effective rate will increase because the individual will "feel" less of an effect from the income exempted.

So, under the flat tax scenario described above (17% tax with $30,000 subsistence income exempted), the person making $30,001 has a very tiny effective rate ($0.17/$30,0001) while the person making $130,000 has a much larger effective rate ($17,000/$130,000 = about 13%). So, unless a flat tax taxes absolutely every penny made by everyone (which is probably politically untenable), it is still progressive, just not openly so.

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