James E Clark
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The US government collects 13.85% (7.65% from the paycheck and 6.20% is
from the employer) of the first $106,800 that
employees earn.
Collecting this much tax on the first
dollar that a person in poverty earns is cruel.
Compassion would dictate that we set a
goal of exempting payroll taxes from everyone up
to the level of poverty.
I have taken data from the
US Census Bureau and
plotted household income by year.
The format that I picked presents the
data as a straight line, so that the full range
of data supports each point, and the data can be
extrapolated beyond the end points.
The horizontal x-axis is logarithmic household income.
Logarithmic was picked in part because on
this axis, a 5% raise would be the same distance
to the right at both the low and high income.
The vertical y-axis is percent normal probability of households that
earn less than a given income.
Normal probability is the “bell curve”
that you are familiar with.
This “bell curve” uses 50% at the middle,
lower probability percentages going down the
axis, and higher percentages going up.
Log-normal plots are often used for describing many group attributes.
Among the disparate groups represented by
straight lines on the plot would be; particle
size distribution, risk assessments, both
hardware and living-things life-time estimates,
and monetary donations.
I recommend this plot as a good
visualization for making tax policy decisions.
The
plot of Household Income
has parameters describing the years of 1967,
1979, 1989, 1999, and 2009.
The lack-of-progress from 1999 to 2009 is
difficult to see because 2009 is worse than
1999, but both line are displayed on the plot.
This
plot
shows that the top 30% of households are doing
well and the bottom 30% are doing poorly.
This is the reason that I support giving
everyone a household payroll tax exemption on
the first $20,000 income earned. |
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