Home: www.vipan.com Vipan Singla e-mail: vipan@vipan.com
Roll Your Own Tax Plan

You can enter your own percent discounts that you feel justified for various groups. Hit submit to recalculate.

Your tax discounts for the lower income groups will be distributed as tax surcharges on the higher income groups. It starts with the theoretically ideal scenario of flat tax on taxable income and gives progressively decreasing discounts to increasing income. The tax discount to a lower income group is distributed as a surcharge on the higher income groups in proportion to their AGI.

All of the tax returns are divided into the following groups:

       Group            Income Range*        Median Income*	 Share of All AGI
  ----------------  ----------------------   --------------  ----------------
  Bottom 20%          Less than $9,144           $4,382           1%
  Lower Middle 20%    $9,144  to  $19,124       $13,944           6%
  Middle 20%         $19,124  to  $33,548       $25,229          12%
  Upper Middle 20%   $33,548  to  $60,237       $44,012          21%
  Well-Off 12.2%     $60,237  to  $95,216       $72,213          20%
  Rich 6.5%          $95,216  to $285,321      $142,619          20%
  Richest 1.3%        More than $285,321       $437,396          20%

  *Adjusted Gross Income (AGI)

Another desirable grouping is to divide all of the tax returns so that each group has equal adjusted gross income. Say, 5 groups with 20% of total AGI each. Note that, all one has to do is to consider the first three groups as one group because their total AGI is about 19% (1% + 6% + 12%). The remaining four groups are already at roughly 20% AGI each. Such a grouping automatically puts progressively less number of tax returns in higher income groups. This is desirable because more people get tax breaks while minimizing the amount of tax surcharge on less number of people as a proportion of AGI .

Keep in mind that AMT is likely to apply to tax returns whose AGI is between $75,000 and $627,000.

[1998 Tax Data] [Filing Status] [Group's Share] [Percent of AGI] [Actual Tax] [Flat Tax on AGI] [Flat Tax on Taxable Income] [Proposed Tax] [Roll Your Own Tax Plan] Roll Your Own Tax Distribution Plan (All dollars are in thousands except for range and median values)
  Totals Taxpayer Groups   Breakdown of Top 20% By Equal AGI
Bottom 20% Lower Middle 20% Middle 20% Upper Middle 20% Top 20%   Well-Off 12.2% Rich 6.5% Richest 1.3%
AGI Range   Less than $9,144 $9,144 - $19,124 $19,124 - $33,548 $33,548 - $60,237 More than $60,237   $60,237 - $95,216 $95,216 - $285,321 More than $285,321
Median AGI $25,229 $4,382 $13,944 $25,229 $44,012 $85,717   $72,213 $142,619 $437,396
Group's Share of AGI 100% 1% 6% 12% 21% 59%   20% 20% 20%
Your Proposed % Discount on Tax Owed % % % % N/A   % % %
Tax Discount Distributed Among Higher Income Groups   $2199155 $16992559 $38394333 $56630110 $71019713   $47965784$23053930 $0
Proposed Income Tax Due $788541980 $244351 $5664186 $38394333 $114976285 $629262825   $143897352 $207485366 $277880107
Group's Share of Tax 100% 0% 1% 5% 15% 80%   18% 26% 35%
Tax as % of Group's AGI 15% 0% 2% 6% 10% 20%   13% 19% 26%
Tax as % of Group's TI 21% 2% 5% 11% 15% 25%   19% 25% 29%
Tax Break (Surcharge) from Actual Tax $0 $1523808 $8326574 $8893920 $473073 $-19217375   $-10672022 $-15736417 $7191063
Tax Discount (Surcharge) as % of Actual Tax 0% 86% 60% 19% 0% -3%   -8% -8% 3%
Tax Discount (Surcharge) from TI Flat Tax $0 $2199155 $16849233 $35915272 $42267171 $-97230830   $15555507 $-33339239 $-79447098
Tax Discount (Surcharge) as % of TI Flat Tax 0% 90%75% 48% 27% -18%   10% -19% -40%

© Vipan Singla 2001