Traditionally liberal voices prefer a progressive tax because the tax rate increases in steps. Those on top pay significantly more than those on the bottom. Conservatives, on the other hand, tend to prefer a flat tax because it greatly simplifies the tax code in addition to the wealthy paying less than the progressive tax approach.
So what's the Floor Tax? The Floor Tax is combination of the approaches: it's a flat tax with a minimum income amount that won't be taxed. By adding a 'floor', or a minimum amount that will not be taxed for anyone the effective tax increases as you make more money. Those on the bottom will not pay anything, and those on top will have the highest effective tax rate.
Here a quick and easy example:
Let's suppose the rate is set to 20%, and the floor is set to $40K. This means that nothing will be taxed up until $40K (sparing minimum wage workers, part-time workers, etc.). If a worker made $50K however, they would be taxed on the difference between their earnings and the floor which would be $10K ($50K-$40K=$10K).
The rate at which that $10K would be taxed would be the same for everyone, in this case 20% equalling $2K. Now let's calculate their effective tax rate: $2K/$50K = 4%.
Other incomes would look like:
| Income | Taxable Income | Tax Paid | Effective Rate |
|---|---|---|---|
| $50K | $10K | $2K | 4% |
| $100K | $60K | $12K | 12% |
| 200K | $160K | $32K | 16% |
Why this could work
A good tax rate needs to be pliable to adjust with the times and the different approaches by different parties. This tax system, while still remaining brilliantly simple, still allows for the two levers (rate and floor) to be modified. Liberals can argue for a higher floor and steeper rate, conservatives can argue for a lower floor and more level rate. The Floor Tax
