system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: Why isn't there a flat tax rate?

I can't understand why everyone is not taxed on the same percentage of their income and worth. Wouldn't it be a lot more fair if everyone was taxed at an equal percentage?
gpt
The idea is that there is a minimum amount you need to spend to live (cheapest food possible, small home / flat, for the US a car etc.). We'll call this the cost of living. Everything they make above that can be used to buy nice things like better food, a bigger home, a big TV etc.

Say there is a city where the cost of living is $10,000 per year and there are 3 people: one earning $15,000 per year, one earning $35,000 per year and one earning $150,000 per year.

If there was a flat rate of 20% tax then they would take home $12,000, $28,000 and $120,000 after tax.

When you take off the cost of living then the poorest person has just $2,000 per year extra to spend, the middle earner has $18,000 left and the richest still has $110,000.

Now with a tax rate of 0% up to $10k, 15% up to $50k then 30% above that, the take home of everyone would be $14,250, $31,250 and $114,000

This means that the poorest person has twice as much ($4,250) they can spend, the middle earner has a bit more ($21,250) and the richest has slightly less but still earns a lot.

Basically poor people hardly pay any tax anyway because they earn very little, but by cutting that small amount further it greatly increases their standard of living, where for someone who already earns a lot slightly higher tax rate wouldn't make any difference to their standard of living.

Also something to remember is even if a person doesn't pay income tax there are lots of other taxes they pay (sales tax etc.) that means a large portion of their money still goes towards taxes.