Victory Tax: A Holistic Income Tax System

How can an income tax system be designed to exploit human nature and a free market to create a poverty free society, while balancing budgets without disproportional tax burdens? Such a tax system, with universal character, is deduced from the following guiding principles: (1) a single tax rate appli...

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Autor principal:	Donald J. Jacobs
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	income tax tax deduction income redistribution government transfer government dependency poverty line Science Q Astrophysics QB460-466 Physics QC1-999
Acceso en línea:	https://doaj.org/article/2aee95acb85f4bdfbeeb650dfc6d6cb2
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spelling	oai:doaj.org-article:2aee95acb85f4bdfbeeb650dfc6d6cb22021-11-25T17:30:07ZVictory Tax: A Holistic Income Tax System10.3390/e231114921099-4300https://doaj.org/article/2aee95acb85f4bdfbeeb650dfc6d6cb22021-11-01T00:00:00Zhttps://www.mdpi.com/1099-4300/23/11/1492https://doaj.org/toc/1099-4300How can an income tax system be designed to exploit human nature and a free market to create a poverty free society, while balancing budgets without disproportional tax burdens? Such a tax system, with universal character, is deduced from the following guiding principles: (1) a single tax rate applies to all income types and levels; (2) the tax rate adjusts to satisfy budget projections; (3) government transfer only supplements the income of households with self-generated income below the poverty line; (4) deductions for basic living expenses, itemized investments and capital losses are allowed; (5) deductions cannot be applied to government transfer. A general framework emerges with three parameters that determine a minimum allowed tax deduction, a maximum allowed itemized deduction, and a maximum deduction defined by income percentage. An income distribution that mimics the United States, and a series of log-normal distributions are considered to quantitatively compare detailed characteristics of this tax system to progressive and flat tax systems. To minimize government dependency while maximizing after-tax income, the effective tax rate (<i>ETR</i>) as a function of income percentile takes the shape of the letter, V, inspiring the name victory tax, where the middle class has the lowest <i>ETR</i>.Donald J. JacobsMDPI AGarticleincome taxtax deductionincome redistributiongovernment transfergovernment dependencypoverty lineScienceQAstrophysicsQB460-466PhysicsQC1-999ENEntropy, Vol 23, Iss 1492, p 1492 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	income tax tax deduction income redistribution government transfer government dependency poverty line Science Q Astrophysics QB460-466 Physics QC1-999
spellingShingle	income tax tax deduction income redistribution government transfer government dependency poverty line Science Q Astrophysics QB460-466 Physics QC1-999 Donald J. Jacobs Victory Tax: A Holistic Income Tax System
description	How can an income tax system be designed to exploit human nature and a free market to create a poverty free society, while balancing budgets without disproportional tax burdens? Such a tax system, with universal character, is deduced from the following guiding principles: (1) a single tax rate applies to all income types and levels; (2) the tax rate adjusts to satisfy budget projections; (3) government transfer only supplements the income of households with self-generated income below the poverty line; (4) deductions for basic living expenses, itemized investments and capital losses are allowed; (5) deductions cannot be applied to government transfer. A general framework emerges with three parameters that determine a minimum allowed tax deduction, a maximum allowed itemized deduction, and a maximum deduction defined by income percentage. An income distribution that mimics the United States, and a series of log-normal distributions are considered to quantitatively compare detailed characteristics of this tax system to progressive and flat tax systems. To minimize government dependency while maximizing after-tax income, the effective tax rate (<i>ETR</i>) as a function of income percentile takes the shape of the letter, V, inspiring the name victory tax, where the middle class has the lowest <i>ETR</i>.
format	article
author	Donald J. Jacobs
author_facet	Donald J. Jacobs
author_sort	Donald J. Jacobs
title	Victory Tax: A Holistic Income Tax System
title_short	Victory Tax: A Holistic Income Tax System
title_full	Victory Tax: A Holistic Income Tax System
title_fullStr	Victory Tax: A Holistic Income Tax System
title_full_unstemmed	Victory Tax: A Holistic Income Tax System
title_sort	victory tax: a holistic income tax system
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/2aee95acb85f4bdfbeeb650dfc6d6cb2
work_keys_str_mv	AT donaldjjacobs victorytaxaholisticincometaxsystem
_version_	1718412274613354496

Victory Tax: A Holistic Income Tax System

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