How the "Income" Tax Rate for Poor People is Higher Than the "Income" Tax Rate for Rich People

How the "Income" Tax Rate for Poor People is Higher Than the "Income" Tax Rate for Rich People

The last time I checked, the constitutional definition of income is “Profit from Corporate Activity” and an “Income Statement” shows you how much profit a corporation has made. The reason I mention this is because Income means Profit in any other situation other than a personal tax return. Revenues aren’t taxed…only profit is. The same should hold true for individuals. After all if a corporation can be afforded the rights of an individual then an individual should be afforded the same rights as a corporation. Let’s say that it takes about $2000 per month for an individual to survive in Orange County . Everything above that should be taxed as profit (or disposable income) in order to be fair and it should be a flat tax. Check it out…

Here’s how the system we have works for federal taxes only (not including sales taxes, property taxes, state taxes, gas tax…ect.)

Monthly Wages $3500
Cost of Living $2000
Disposable Income $1500
Tax Rate 25%
Taxable Wages $3500
Taxes Paid p/Mo $875
% of Income Paid in Taxes 58%

Monthly Wages $20,000
Cost of Living $2000
Disposable Income $18,000
Tax Rate 35%
Taxable Wages $20,000
Taxes Paid p/Mo $7000
% of Income Paid in Taxes 39%

Here’s how it should work

Monthly Wages $3500
Cost of Living $2000
Disposable Income $1500
Tax Rate 40%
Taxable INCOME $1500
Taxes Paid p/Mo $600
% of Income Paid in Taxes 40%

Monthly Wages $20,000
Cost of Living $2000
Disposable Income $18,000
Tax Rate 40%
Taxable INCOME 18000
Taxes Paid p/Mo $7200
% of Income Paid in Taxes 40%

If you really look at the numbers above you see that the lower your wages the higher your INCOME tax rate is. If you took into account all the other taxes that the average person has to pay as a % of their income, their INCOME tax rate would be significantly higher. Also, if you took into account all the tax breaks that rich people can take advantage of (capital gains taxes are only 15%, mortgage interest is tax deductible…ect) you would see an even wider gap between the income tax rates that poor people pay vs. rich poeple.