The federal government spends approximately 20% of GDP annually. Therefore, a tax rate of 20% on all personal and corporate income ought to cover all of our government's expenses. In fact, because of double taxation as well as other miscellaneous federal taxes, 18% should cover it. So why are tax rates so much higher than 18%?
Some will say "because poor workers pay lower taxes which means that everyone else has to make it up." People who say this are severely understimating the taxes paid by poor workers. FICA taxes of 7.65% are paid by the worker and an additional 7.65% tax is paid by the employer, and of course this is really just a hidden tax on the worker whose real salary is 7.65% higher than what it says on his paycheck. The effective tax on the worker's full salary is 14.2%, and this is paid on the very first dollar earned.
An additional flat tax of 3.8% on all workers making less than $94,200, and an additional 15.2% marginal tax on income higher than $94.200, along with an 18% tax on all other income not subject to FICA taxes and an 18% corporate income tax rate should cover all of the government's revenue needs.
So why are taxe rates so high? Maybe I don't understand "GDP" because I was slacking off in my college macroeconomics class. Or maybe the tax code is so riddled with loopholes that rich people and corporations are able avoid paying tax on approximately half their income.