Very High Incomes

The Fair-and-Simple Tax on Very High Incomes

Under the STR tax proposal, most of us will have neither a federal income tax to pay nor tax-filing obligations. 99% of Americans will pay no income taxes. Only the wealthiest 1% of taxpayers in the country might be subject to the income tax in any given year. For them, the fair-and-simple income tax on very high incomes will truly be very simple. First, all income from whatever source will be totaled. Then, $1 million will be excluded. Finally, all legitimate charitable donations can be deducted. Only total annual income greater than the combined total of the $1 million plus all donations will be subject to any income tax:

          Net taxable income = (Total income) - ($1 million exclusion) - (charitable donations)

For the less than 1% of taxpayers who still will owe taxes, the tax rates will be very simple:

• 15% of the first $10 million of net taxable income
• 25% of the next $15 million of net taxable income
• 35% of net taxable income greater than $25 million

At the present time, the 15% rate begins (for a family of four) at only $16,050 (2008), the 25% rate at $65,100 and the 35% rate at only $357,700. Sensible Tax Reform will totally eliminate the income tax for the vast majority of Americans. For those with very high incomes, only those three tax rates will apply, but at much higher income levels than at present.