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What exactly would that mean for ahousehold earning $75,000 per year?
That comes to $5,032 in regular federal income taxes.
A single taxpayer would save more: $8,341, to be precise.
They only get the standard deduction once, so their taxable income is $60,400.
Employers and employees split these taxes.
If the president did cut FICA taxes, too, that would save these households $5,738 per year.
The number applies to both single and married taxpayers, since deductions and margins dont apply to FICA taxes.
Implications and Risks
Those savings sound great on paper.
But what are the potential downstream effects of ditching these taxes?
They made up 49.3% of all revenue.
That means theyll need other sources of revenue.
Read: other types of taxes.
The administration has already announced sweeping tariffs to tax imported goods.
Despite the enormous scale of the tariffs, they are unlikely to raise $2.43 trillion.
In other words, income taxes are a net positive for them a form of wealth redistribution.
I am currently overwhelmed with bankruptcy flings.
Thats a liquidation bankruptcy, where all their assets get sold to pay off debts.
And that says nothing of reduced spending on government support programs for lower-income earners.
Lost Incentive Structure
The federal government uses income tax breaks to incentivize behaviors they want to encourage.
Its a form of behavior management by the government.
Taxpayers might not save as much for retirement.
Retirement accounts arent the only tax incentive designed to modify Americans behavior.
Other examples include child tax credits and the mortgage interest deduction.
Theres just too much money at stake for the government.
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