Personal and Business Tax Problems and Solution with 2 or 1 Fair and Simple Linear Formula
Federal and State Tax Simplification for Fair and Simple Tax Rate and Saving (PPT)
Why our simple social security tax cliff and tax problems are still not resolved after 5 years of discussions?
Federal Tax Problems and Simple Solution CA Tax Problems and Simple Solution to Save $700 Million
NY Tax Problems and Simple Solution to Save $500 Million MO Tax Problems and Simple Solution to Save $170 Million
Benefits and Values of State LG Tax Simplification for Governments, Businesses, and Taxpayers Research Publication
Benefits and Values of the LG Tax Simplification for Federal Government, Companies and Taxpayers Research Publication
Simple and Fair Formula for Resolving Tax Cliff, Multi-Bracket, and Multi-Page Table Problems:
Example 1: Social security tax cliff problem and solution: #1 Testimony #1 Tax Bill (Page 48) #1 News
Example 2: Income tax simplification with one linear formula: #2 Testimony #2 Tax Bill (Page 3) #2 Fiscal Note
Example 3: Ten tax brackets are matched and simplified to two brackets: #3 Testimony #3 Tax Bill (Pages 3-4) #3 Summary
Would you please join me to sign a public petition to simplify our tax systems and save our tax revenue (billions of dollars)
www.change.org/p/income-tax-simplification-to-save-our-tax-revenue-billions-of-dollars
One-Page Form for Both Federal and State Tax Returns: Link: Table 3 (38 lines) or Link: Table 5
(When federal and state standard deductions, exemptions, and credits are claimed, two tax returns can be one page only, which can help
many low and mid incomers. When people have itemized deductions, non-standard exemptions, and tax credits with complex tax situations,
additional information and document(s) may be needed. Tax rate check can be used as a tool to reduce calculation mistakes.)
Background and purpose for tax calculation simplification:
Income tax is relatively complex issue with different factors. There are two extreme trends. One is that some lawmakers view tax simplification to conflict with raising public tax revenues. Tax systems may continue to become more complex in many states and countries. There are multiple tax brackets, withholding tables, withholding formulas, and tax tables, which increase tax system complexity. Complex tax systems mean more time and costs involved. Another is to use flat tax rates, which are too simple, rough and unfair, to treat complex income tax issue. Flat rates can not resolve related problems of income taxes, tax revenues, basic living costs, and others fairly.
Federal and state income tax calculation systems usually have current 2-12 tax brackets, multiple taxable income ranges (Problem #1: too many taxable income ranges with different numbers), xx-page Withholding Tables (Problem #2: too many pages), xx withholding formulas (Problem #3: too many formulas), Tax Table (x or xx pages), unsmooth tax rate changes, 2 tax systems for companies and individuals separately, and related tax computations, which are complex. Also tax systems are usually modified yearly, which have caused these items to be very complex. Tax brackets for the US federal individual income tax systems are often changed over time such as 7 in 2013-2023, 6 in 2010, 5 in 2000, 15 in 1980, 24 in 1950, 56 in 1920, 7 in 1913, 1 in 1870, 3 in 1864 or 2 in 1862 from 1 to 56 (Reference #1). For smooth and reasonable tax rate changes with existing tax systems, more existing marginal tax brackets are needed.
Our tax research goal is to have a technical simplification with 2 or 3 brackets/formulas for state or federal tax systems, which provides a balanced, fair, simple, and long-term solution. Then existing multiple brackets, 45-224 formulas, and xx-page withholding tables can be matched and simplified with 1 or 2 linear formulas and 1 existing formula by 90%-99% simplification. There are 15 benefits to save millions or billions of dollars (A and B).
A: www.scitcentral.com/documents/be5648da4795008d9893b752b9226c8f.pdf
B: https://taxsimplecenter.net/uploads/8/3/3/9/83395216/jbe20220923-1edition.pdf
A checking tool is provided to reduce calculation mistakes. Then withholding tax, payroll, income tax, tax return, analysis, reform and projection calculations can be simplified. The above 2 tax systems for companies and individuals can be combined simply. Existing withholding tables (xx pages) can be eliminated. Existing tax table or its formula can be used as one option. Tax calculation simplification can be used to save time and costs. Effective tax rates are used to replace existing marginal tax rates. Then for tax reforms, lawmakers adjust only 3 (or 4) tax rates at bottom, middle(s) and top to replace adjusting existing different factors of tax brackets, tax rates, and taxable income ranges at the same time for meeting a tax revenue goal.
Methods: We have done our tax simplification research with 15 publications at http://taxsimplecenter.net/publication.html When 2 tax rates are set, simple effective (linear) tax rates between the two points with a straight line are fair and practical. Existing flat and curve or step tax rates with less or more tax brackets are unfair and complex. Figure 1 / Comparison
* Fair tax rate changes: www.scitcentral.com/documents/be5648da4795008d9893b752b9226c8f.pdf (3. Tax Rate Change Speed, ......)
Paper: Existing Personal Tax System and Simplification (Partial) .
Existing System Simplification
State Bracket# Status# Formula# Withholding Tables Tax Table Checking Tool Matched by Checking Tool
AR 12 1 72 (12×6) 80 pages 5 pages No 2 or 3 brackets/formulas Yes
CA 9 5/3 216 (9×3×8) 29 pages 5 pages No 2 or 3 brackets/formulas Yes
DC 6 1 48 (6×8) 16 pages 10 pages No 2 brackets/formulas Yes
HI 9 5/3 27×Periods 32 pages 12 pages No 3 or 2 brackets/formulas Yes
IA 9 1 45 (9×5) 13 pages 5 pages No 2 or 3 brackets/formulas Yes
KS 3-8 2 48 (3×2×8) 22 pages 8 pages No 2 brackets/formulas Yes
MD 8 2 112 (8×2×7) 18 pages 7 pages No 2 brackets/formulas Yes
MN 4 4 96 (4×4×6) 18 pages 6 pages No 2 brackets/formulas Yes
MO 10/9 1 54 (9×6) 10 pages 1 page No 2 brackets/formulas Yes
NE 4 4 16×Periods 20 pages 3 pages No 2 brackets/formulas Yes
NY 8 5/3 144 (8×3×6) 11 pages 8 pages No 3 or 2 brackets/formulas Yes
WI 4 3 72 (4×3×6) 26 pages 6 pages No 2 brackets/formulas Yes
Federal 7 5/4 224 (7×4×8) 21 pages 12 pages No 3 brackets/formulas Yes .
The LG tax system can be used to simplify current tax systems and save $20-900 million/year for a state (from small Wyoming to large California) compared to an existing state tax system (2-12 tax brackets) or $10 billions/year compared to the existing federal tax system with multi tax brackets, tax rate schedules/charts, tax withholding tables, tax tables, and tax computations for lawmakers, employers, employees and departments of revenue.
Example 1: Such as for Single or Married filing separately with taxable incomes (TI) not over $100,000, existing (2018*) federal tax rate formula, difference, change and withholding table comparisons are:
Taxable incomes Existing tax system LG tax rate simplification Taxable incomes Existing rate Proposed rate Difference
0 - $9,525 10% for TI not over $9,525 (0 -$100,000) $1,000 0.1 0.10083 0.0008
$9,525 - $38,700 (952.5+0.12 (TI-9,525)) / TI $20,000 0.11045 0.1166 0.0062
$38,700 - $82,500 (4,453.50+0.22 (TI-38,700)) / TI TI/1,204,819 + 0.1 $50,000 0.13879 0.1415 0.0027
$82,500 - $100,000 (14,089.50+0.24 (TI-82,500)) / TI $75,000 0.16586 0.16225 - 0.0036
Tax rate change Unfair flat/curve rates w/o smoothness Fair tax rates w/smoothness $100,000 0.182895 0.183 0.0001
Withholding Tables 21 pages with 0-10 Allowances 4 formulas with all Allowances
* At taxable incomes are at 0-$100,000-$300,000, tax rates are changed: 10%-18.3%-26.9%-37% for 2018, 10%-18.17%-26.73%-37% for 2019 or 10%-18.1%-26.6%-37% for 2020 by IRS. Standard deductions are changed from $12,000xS (S=1, 1.5 or 2) to $12,200xS or $12,400xS in 2018-2020.
Other application examples are such as: (1) 240/480 brackets in 2020 Stimulus Check calculation are matched/reduced to 1 bracket (>99% reduction), which are available at www.taxsimplecenter.net/federaltaxsimplification.html
(2) social security tax cliff is resolved, (3) some tax credits with 10-30 brackets are matched/simplified to 1, and (4) earned income tax credit (EITC) with 9 pages are matched/simplified with simple 4 formulas, which are available at Summary
Americans spend 8.9 billion hours/year complying with IRS filing requirements and cost $409 billion/year (Reference #2). Tax simplification may need following areas to be simplified:
1. Tax calculation is simplified to match/reduce existing 7 (or 4-12) tax brackets and taxable income ranges to 2 or 3, eliminate many-page withholding tables with 0-10 allowances, give simple numbers for different tax statuses, and provide a checking tool for reducing calculation mistakes;
2. Standard deductions are increased to include exemptions together, which have been done by the Tax Cuts and Jobs Act (2018) for individuals and couples;
3. Itemized deduction may be simplified or eliminated. Neutral tax revenue may be reached by reducing top tax rate and reducing bottom tax rate with tax simplification, which may benefit for all taxpayers fairly;
4. Various credit, exemption and earned income tax credit for children may be simplified or combined together;
5. Various exemption, credit, retirement contribution and distribution, and social security benefit for seniors may be simplified or combined together. Simple tax return form is provided for seniors’ tax simplification;
6. Alternative Minimum Tax (AMT), which applies to about 4 million tax returns, may be eliminated or simplified;
7. Some "complex" political problems, which may cause social conflicts, are converted into "simple" technical issues;
8. When 2 rates are set, simple effective (linear) tax rates between the two points with a straight line are fair and simple, which may be applied for such as tax rates, social security benefit rates, working family credit rates, homestead credit refund rates, and earned income tax credit rates. Existing flat and curve rates or step (cliff) rates with less or more brackets are unfair and complex; and
9. Existing two tax systems, which are about 13 months apart, may be simplified and combined together to provide one common system or format for all related parties to have tax simplification fairly and simply.
There are usually two tax systems in an existing tax system: (1) Tax Rate Schedules and lengthy tax withholding tables (such as federal 21 pages, KS 22 pages or MO 10 pages) are used for employers to estimate income taxes and (2) Tax Table (federal 12 pages) and Tax Computation are used for taxpayers to correct tax estimations and file tax returns. Federal Publication 15 (Employer's Tax Guide) has 69 pages. Publication 15-A (Supplement to Pub. 15, Employer's Tax Guide) has 73 pages. The differences between the two tax systems add tax complexity, require every taxpayer to file a tax return and cause potential tax fraud crimes. 1040 Instruction has 108 pages. 1040A Instruction has 92 pages. 1040EZ Instruction has 48 pages. Most state tax systems are in similar situations. All tax reform, budget balance, tax system and code simplifications are important.
One effective (linear) tax rate range with a straight line can be used to replace several existing tax brackets with flat and curve tax rates comparably (see the figures at the bottom parts of Federal and State websites). Linear relationship is the most fair and simple without connecting with taxable incomes for its changing slope, which provides a good foundation for “Fair and Simple Tax Rates for Big Saving”. The LG tax rate system can offer the 12 -15 benefits to help lawmakers, taxpayers, companies and governments:
Benefits of LG Tax System:
For Major Benefits
_____________________________________________________________________________________
Lawmakers To convert complex political factors/options into one simple technical factor and
have no more struggle about tax bracket #, different TI ranges and tax rates
Taxpayers To let 50% taxpayers to not file normal tax returns and save time and money *
Companies To not need withholding tables (21 pages) for withholding taxes and payrolls
Governments To process less tax returns (goal: 50% deduction) during busy tax season, inspect
more tax returns and reduce potential tax crimes for collecting more taxes
Tax Brackets 2 brackets for a state or 3 brackets for federal government (comparable tax rates)
Value To save $20-900 million or $10 billion/year on state or federal level
____________________________________________________________________________________
* (1) Many incomers with standard deductions and federal/state taxable incomes (TI) $100,000/$50,000*S or less (S is 1, 1.5 or 2) have option to not file normal tax returns for saving time and costs; (2) A tax rate checking tool is provided to reduce tax calculation mistakes; (3) Governments and tax software companies usually provide free tax programs for low incomers. These companies may concentrate their software products for high-mid incomers; and (4) CPAs may focus their professional services about tax codes for high-mid incomers.
The LG tax system may save $20-900 million/year for a state or $10 billions/year for the federal compared to the existing state or federal tax systems with 2-12 tax brackets. Many taxpayers use standard deductions for filing tax returns such as about 70% of tax returns use the federal standard deductions and 80% of tax returns in Kansas use their state standard deductions. After standard deductions are increased to $12,000*S (S is tax status # 1, 2 or 1.5), more taxpayers will use $12,000*S, which may be raised from 70% to 84%. Many tax returns with standard deductions and taxable incomes not over $100,000*S may do not need to file normal tax returns with or without modification to save time and costs for taxpayers and governments.
Tax simplifications include for: (1) calculating taxes; (2) setting tax codes; (3) processing withholding taxes and (4) filing tax returns. Not only the LG tax rate system can simplify current complicated federal and state tax calculation systems for individuals and businesses, but can also reduce political arguments, processing time and costs for lawmakers, individuals, businesses, and governments. The LG tax system and its processors can be used for processing withholding tax, payroll and tax return systems, which help tax (tax rate) calculation, analysis, modification, reform and projection.
For more information or question/comment, please contact us at inf@taxsimplecenter.net or 913-710-0957
Reference #1: https://taxfoundation.org/historical-income-tax-rates-brackets/
Reference #2: https://taxfoundation.org/compliance-costs-irs-regulations
Federal and State Tax Simplification for Fair and Simple Tax Rate and Saving (PPT)
Why our simple social security tax cliff and tax problems are still not resolved after 5 years of discussions?
Federal Tax Problems and Simple Solution CA Tax Problems and Simple Solution to Save $700 Million
NY Tax Problems and Simple Solution to Save $500 Million MO Tax Problems and Simple Solution to Save $170 Million
Benefits and Values of State LG Tax Simplification for Governments, Businesses, and Taxpayers Research Publication
Benefits and Values of the LG Tax Simplification for Federal Government, Companies and Taxpayers Research Publication
Simple and Fair Formula for Resolving Tax Cliff, Multi-Bracket, and Multi-Page Table Problems:
Example 1: Social security tax cliff problem and solution: #1 Testimony #1 Tax Bill (Page 48) #1 News
Example 2: Income tax simplification with one linear formula: #2 Testimony #2 Tax Bill (Page 3) #2 Fiscal Note
Example 3: Ten tax brackets are matched and simplified to two brackets: #3 Testimony #3 Tax Bill (Pages 3-4) #3 Summary
Would you please join me to sign a public petition to simplify our tax systems and save our tax revenue (billions of dollars)
www.change.org/p/income-tax-simplification-to-save-our-tax-revenue-billions-of-dollars
One-Page Form for Both Federal and State Tax Returns: Link: Table 3 (38 lines) or Link: Table 5
(When federal and state standard deductions, exemptions, and credits are claimed, two tax returns can be one page only, which can help
many low and mid incomers. When people have itemized deductions, non-standard exemptions, and tax credits with complex tax situations,
additional information and document(s) may be needed. Tax rate check can be used as a tool to reduce calculation mistakes.)
Background and purpose for tax calculation simplification:
Income tax is relatively complex issue with different factors. There are two extreme trends. One is that some lawmakers view tax simplification to conflict with raising public tax revenues. Tax systems may continue to become more complex in many states and countries. There are multiple tax brackets, withholding tables, withholding formulas, and tax tables, which increase tax system complexity. Complex tax systems mean more time and costs involved. Another is to use flat tax rates, which are too simple, rough and unfair, to treat complex income tax issue. Flat rates can not resolve related problems of income taxes, tax revenues, basic living costs, and others fairly.
Federal and state income tax calculation systems usually have current 2-12 tax brackets, multiple taxable income ranges (Problem #1: too many taxable income ranges with different numbers), xx-page Withholding Tables (Problem #2: too many pages), xx withholding formulas (Problem #3: too many formulas), Tax Table (x or xx pages), unsmooth tax rate changes, 2 tax systems for companies and individuals separately, and related tax computations, which are complex. Also tax systems are usually modified yearly, which have caused these items to be very complex. Tax brackets for the US federal individual income tax systems are often changed over time such as 7 in 2013-2023, 6 in 2010, 5 in 2000, 15 in 1980, 24 in 1950, 56 in 1920, 7 in 1913, 1 in 1870, 3 in 1864 or 2 in 1862 from 1 to 56 (Reference #1). For smooth and reasonable tax rate changes with existing tax systems, more existing marginal tax brackets are needed.
Our tax research goal is to have a technical simplification with 2 or 3 brackets/formulas for state or federal tax systems, which provides a balanced, fair, simple, and long-term solution. Then existing multiple brackets, 45-224 formulas, and xx-page withholding tables can be matched and simplified with 1 or 2 linear formulas and 1 existing formula by 90%-99% simplification. There are 15 benefits to save millions or billions of dollars (A and B).
A: www.scitcentral.com/documents/be5648da4795008d9893b752b9226c8f.pdf
B: https://taxsimplecenter.net/uploads/8/3/3/9/83395216/jbe20220923-1edition.pdf
A checking tool is provided to reduce calculation mistakes. Then withholding tax, payroll, income tax, tax return, analysis, reform and projection calculations can be simplified. The above 2 tax systems for companies and individuals can be combined simply. Existing withholding tables (xx pages) can be eliminated. Existing tax table or its formula can be used as one option. Tax calculation simplification can be used to save time and costs. Effective tax rates are used to replace existing marginal tax rates. Then for tax reforms, lawmakers adjust only 3 (or 4) tax rates at bottom, middle(s) and top to replace adjusting existing different factors of tax brackets, tax rates, and taxable income ranges at the same time for meeting a tax revenue goal.
Methods: We have done our tax simplification research with 15 publications at http://taxsimplecenter.net/publication.html When 2 tax rates are set, simple effective (linear) tax rates between the two points with a straight line are fair and practical. Existing flat and curve or step tax rates with less or more tax brackets are unfair and complex. Figure 1 / Comparison
* Fair tax rate changes: www.scitcentral.com/documents/be5648da4795008d9893b752b9226c8f.pdf (3. Tax Rate Change Speed, ......)
Paper: Existing Personal Tax System and Simplification (Partial) .
Existing System Simplification
State Bracket# Status# Formula# Withholding Tables Tax Table Checking Tool Matched by Checking Tool
AR 12 1 72 (12×6) 80 pages 5 pages No 2 or 3 brackets/formulas Yes
CA 9 5/3 216 (9×3×8) 29 pages 5 pages No 2 or 3 brackets/formulas Yes
DC 6 1 48 (6×8) 16 pages 10 pages No 2 brackets/formulas Yes
HI 9 5/3 27×Periods 32 pages 12 pages No 3 or 2 brackets/formulas Yes
IA 9 1 45 (9×5) 13 pages 5 pages No 2 or 3 brackets/formulas Yes
KS 3-8 2 48 (3×2×8) 22 pages 8 pages No 2 brackets/formulas Yes
MD 8 2 112 (8×2×7) 18 pages 7 pages No 2 brackets/formulas Yes
MN 4 4 96 (4×4×6) 18 pages 6 pages No 2 brackets/formulas Yes
MO 10/9 1 54 (9×6) 10 pages 1 page No 2 brackets/formulas Yes
NE 4 4 16×Periods 20 pages 3 pages No 2 brackets/formulas Yes
NY 8 5/3 144 (8×3×6) 11 pages 8 pages No 3 or 2 brackets/formulas Yes
WI 4 3 72 (4×3×6) 26 pages 6 pages No 2 brackets/formulas Yes
Federal 7 5/4 224 (7×4×8) 21 pages 12 pages No 3 brackets/formulas Yes .
The LG tax system can be used to simplify current tax systems and save $20-900 million/year for a state (from small Wyoming to large California) compared to an existing state tax system (2-12 tax brackets) or $10 billions/year compared to the existing federal tax system with multi tax brackets, tax rate schedules/charts, tax withholding tables, tax tables, and tax computations for lawmakers, employers, employees and departments of revenue.
Example 1: Such as for Single or Married filing separately with taxable incomes (TI) not over $100,000, existing (2018*) federal tax rate formula, difference, change and withholding table comparisons are:
Taxable incomes Existing tax system LG tax rate simplification Taxable incomes Existing rate Proposed rate Difference
0 - $9,525 10% for TI not over $9,525 (0 -$100,000) $1,000 0.1 0.10083 0.0008
$9,525 - $38,700 (952.5+0.12 (TI-9,525)) / TI $20,000 0.11045 0.1166 0.0062
$38,700 - $82,500 (4,453.50+0.22 (TI-38,700)) / TI TI/1,204,819 + 0.1 $50,000 0.13879 0.1415 0.0027
$82,500 - $100,000 (14,089.50+0.24 (TI-82,500)) / TI $75,000 0.16586 0.16225 - 0.0036
Tax rate change Unfair flat/curve rates w/o smoothness Fair tax rates w/smoothness $100,000 0.182895 0.183 0.0001
Withholding Tables 21 pages with 0-10 Allowances 4 formulas with all Allowances
* At taxable incomes are at 0-$100,000-$300,000, tax rates are changed: 10%-18.3%-26.9%-37% for 2018, 10%-18.17%-26.73%-37% for 2019 or 10%-18.1%-26.6%-37% for 2020 by IRS. Standard deductions are changed from $12,000xS (S=1, 1.5 or 2) to $12,200xS or $12,400xS in 2018-2020.
Other application examples are such as: (1) 240/480 brackets in 2020 Stimulus Check calculation are matched/reduced to 1 bracket (>99% reduction), which are available at www.taxsimplecenter.net/federaltaxsimplification.html
(2) social security tax cliff is resolved, (3) some tax credits with 10-30 brackets are matched/simplified to 1, and (4) earned income tax credit (EITC) with 9 pages are matched/simplified with simple 4 formulas, which are available at Summary
Americans spend 8.9 billion hours/year complying with IRS filing requirements and cost $409 billion/year (Reference #2). Tax simplification may need following areas to be simplified:
1. Tax calculation is simplified to match/reduce existing 7 (or 4-12) tax brackets and taxable income ranges to 2 or 3, eliminate many-page withholding tables with 0-10 allowances, give simple numbers for different tax statuses, and provide a checking tool for reducing calculation mistakes;
2. Standard deductions are increased to include exemptions together, which have been done by the Tax Cuts and Jobs Act (2018) for individuals and couples;
3. Itemized deduction may be simplified or eliminated. Neutral tax revenue may be reached by reducing top tax rate and reducing bottom tax rate with tax simplification, which may benefit for all taxpayers fairly;
4. Various credit, exemption and earned income tax credit for children may be simplified or combined together;
5. Various exemption, credit, retirement contribution and distribution, and social security benefit for seniors may be simplified or combined together. Simple tax return form is provided for seniors’ tax simplification;
6. Alternative Minimum Tax (AMT), which applies to about 4 million tax returns, may be eliminated or simplified;
7. Some "complex" political problems, which may cause social conflicts, are converted into "simple" technical issues;
8. When 2 rates are set, simple effective (linear) tax rates between the two points with a straight line are fair and simple, which may be applied for such as tax rates, social security benefit rates, working family credit rates, homestead credit refund rates, and earned income tax credit rates. Existing flat and curve rates or step (cliff) rates with less or more brackets are unfair and complex; and
9. Existing two tax systems, which are about 13 months apart, may be simplified and combined together to provide one common system or format for all related parties to have tax simplification fairly and simply.
There are usually two tax systems in an existing tax system: (1) Tax Rate Schedules and lengthy tax withholding tables (such as federal 21 pages, KS 22 pages or MO 10 pages) are used for employers to estimate income taxes and (2) Tax Table (federal 12 pages) and Tax Computation are used for taxpayers to correct tax estimations and file tax returns. Federal Publication 15 (Employer's Tax Guide) has 69 pages. Publication 15-A (Supplement to Pub. 15, Employer's Tax Guide) has 73 pages. The differences between the two tax systems add tax complexity, require every taxpayer to file a tax return and cause potential tax fraud crimes. 1040 Instruction has 108 pages. 1040A Instruction has 92 pages. 1040EZ Instruction has 48 pages. Most state tax systems are in similar situations. All tax reform, budget balance, tax system and code simplifications are important.
One effective (linear) tax rate range with a straight line can be used to replace several existing tax brackets with flat and curve tax rates comparably (see the figures at the bottom parts of Federal and State websites). Linear relationship is the most fair and simple without connecting with taxable incomes for its changing slope, which provides a good foundation for “Fair and Simple Tax Rates for Big Saving”. The LG tax rate system can offer the 12 -15 benefits to help lawmakers, taxpayers, companies and governments:
Benefits of LG Tax System:
For Major Benefits
_____________________________________________________________________________________
Lawmakers To convert complex political factors/options into one simple technical factor and
have no more struggle about tax bracket #, different TI ranges and tax rates
Taxpayers To let 50% taxpayers to not file normal tax returns and save time and money *
Companies To not need withholding tables (21 pages) for withholding taxes and payrolls
Governments To process less tax returns (goal: 50% deduction) during busy tax season, inspect
more tax returns and reduce potential tax crimes for collecting more taxes
Tax Brackets 2 brackets for a state or 3 brackets for federal government (comparable tax rates)
Value To save $20-900 million or $10 billion/year on state or federal level
____________________________________________________________________________________
* (1) Many incomers with standard deductions and federal/state taxable incomes (TI) $100,000/$50,000*S or less (S is 1, 1.5 or 2) have option to not file normal tax returns for saving time and costs; (2) A tax rate checking tool is provided to reduce tax calculation mistakes; (3) Governments and tax software companies usually provide free tax programs for low incomers. These companies may concentrate their software products for high-mid incomers; and (4) CPAs may focus their professional services about tax codes for high-mid incomers.
The LG tax system may save $20-900 million/year for a state or $10 billions/year for the federal compared to the existing state or federal tax systems with 2-12 tax brackets. Many taxpayers use standard deductions for filing tax returns such as about 70% of tax returns use the federal standard deductions and 80% of tax returns in Kansas use their state standard deductions. After standard deductions are increased to $12,000*S (S is tax status # 1, 2 or 1.5), more taxpayers will use $12,000*S, which may be raised from 70% to 84%. Many tax returns with standard deductions and taxable incomes not over $100,000*S may do not need to file normal tax returns with or without modification to save time and costs for taxpayers and governments.
Tax simplifications include for: (1) calculating taxes; (2) setting tax codes; (3) processing withholding taxes and (4) filing tax returns. Not only the LG tax rate system can simplify current complicated federal and state tax calculation systems for individuals and businesses, but can also reduce political arguments, processing time and costs for lawmakers, individuals, businesses, and governments. The LG tax system and its processors can be used for processing withholding tax, payroll and tax return systems, which help tax (tax rate) calculation, analysis, modification, reform and projection.
For more information or question/comment, please contact us at inf@taxsimplecenter.net or 913-710-0957
Reference #1: https://taxfoundation.org/historical-income-tax-rates-brackets/
Reference #2: https://taxfoundation.org/compliance-costs-irs-regulations