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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.