In 2007 the total amount of tax collection the federal government brought to the Treasury from all sources was $2.7 Trillion. The population of the U.S. is about 300 million
Assume that all forms of government taxation were abolished and each citizen was required to pay exactly the same as everyone else. What would be the tax burden in dollar terms on each citizen (man, women and child)? How would you characterize a tax system like this? Who would likely protest the most? Who would benefit the most? If the new tax was not repealed, what changes do you believe would take place in the government's budget?
This would amount to a tax bill per person of $9,000 per year per person. This would clearly be characterized as a regressive tax. As incomes rise the average tax rate would fall. Those earning the lowest income or those unemployed would protest the most. Higher income earners would no doubt benefit the most. If the tax were not repealed it seems plausible that government expenditures would be cut drastically since many people at the lower income levels would simply not be able to pay their taxes. If Congress decides not to cut spending it would either have to borrow the money or the Federal Reserve would have to expand the money supply.
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