Question
Hi I need help with these questions. 1. Overheard at one of the 30,000 Seattle area coffee shops: Angry Barista: We need to simplify the
Hi I need help with these questions.
1. Overheard at one of the 30,000 Seattle area coffee shops:
Angry Barista: We need to simplify the tax system! Angrier Barista: Wouldn't it make more sense to just do a 20% flat tax?! Angriest Barista: YES, FLAT TAX! FLAT TAX! FLAT TAX! We will all be better off!
Consider the following scenarios: 1) the current progressive tax system (hint: rates are found in I.R.C. 1); versus 2) a 20-percent flat tax.
Analyze the two options above for three income levels: 1) $50,000; 2) $90,000; and 3) $125,000.
If we were only worried about the best individual outcome, what should we say: progressive or flat tax?
2. An email from a college friend, several years after college: Hey super tax accountant friend, In is August and my wife and I just redid our withholding calculation. It looks like we are going to owe $10,000 more (on top of what we already withheld!) when we file our 2020 taxes. I need to lower my tax liability, fast. Should I go for tax deductions or tax credits?
What should your friend do?
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