Passage Discussion

[ganbayou]

In the last paragraph of passage B it says "So, since they recognize that survival dollars are different from discretionary dollars, why go suddenly from one extreme (paying no taxes) to the other (paying the top rate)?"
I understand one of them is paying no tax, but why the other is "paying the top rate?" working poor does not pay taxes in flat tax right?
Confused with this part...

[ManhattanPrepLSAT1]

Hey ganbayou!

That part is simply saying that some flat tax proposals don't want to make the working poor go from paying "no taxes" to paying the "top rate." So they put in an exemption for the very poorest. Lines 53-58 change the topic toward who's going to feel the impact of implementing a flat tax proposal. Given that flat tax proposals are supposed to bring in as much revenues, if the burden does not hit the working poor, nor the high-income earners, then it must hit the middle class.

Passage A
Thesis: lines 5-8
Purpose: support flat tax proposals

Passage B
Thesis: lines 55-59
Purpose: undermine flat tax proposals

[ganbayou]

The last sentence...
Why the middle people have to make up?

[NatalieC941]

Hello,

I was very, very confused by this passage and what each author was advocating for and what each type of tax actually meant. Is it possible to have a scale/passage map for this?

[ohthatpatrick]

A graduated tax means that you pay different tax rates on different layers of income.

Let's say that
$0 - 50k: no tax
$50 - 100k: 20%
$100k - 200k: 25%
$200k and up: 30%

That would mean that someone who makes $45k pays no tax.

Someone who makes $105k would pay this:
$0 - 50k: nothing
$50 - 100k: 20% of $50k = $10k
$100k - 105k: 25% of $5k = $1.2k

A total of $11.2 k

If you make $1 million, you'll also pay
$0 - 50k: nothing
$50 - 100k: 20% of $50k = $10k
and then it gets different
$100 - 200k: 25% of $100k = $25k
$200 - 1000k: 30% of $800k = $240k

Total tax = $275 k

Meanwhile, in a flat tax system, there is only one interest rate for all levels of income over a certain threshold.

So let's say we are in a 25% flat tax system, where the initial threshold is $50k (the primary layer of $0 - 50k is exempted)

There, someone making $105k would pay 25% on the $65k over the $50k threshold.
Someone making $1 million would pay 25% on the $950k over the $50k threshold.

Hope this helps.