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If the tax rate were graduated from 1% to 20% on the top 20% of the population to the top 1% of the population, the revenue generated from a gross tax on personal income with no personal deductions would depend on the income distribution of the population and the specific tax rates applied at each income level.

Assuming a similar income distribution as in 2019, where the top 20% of households earned around 52% of the total income, and the top 1% of households earned around 16% of the total income (according to data from the Congressional Budget Office), we could estimate the revenue as follows (using the same $11.8 trillion total income reported on tax returns in 2019):

  • The bottom 80% of households (earning less than the top 20%) would not pay any income tax under this system.
  • The top 20% of households (earning between $167,000 and $3.1 million per year, based on 2019 data) would pay a graduated tax rate ranging from 1% to 20%.
  • The top 1% of households (earning over $1.8 million per year, based on 2019 data) would pay the highest tax rate of 20%.

Assuming the graduated tax rates were applied as follows:

  • 1% tax rate on income between $167,000 and $500,000
  • 5% tax rate on income between $500,000 and $1 million
  • 10% tax rate on income between $1 million and $2 million
  • 15% tax rate on income between $2 million and $5 million
  • 20% tax rate on income over $5 million

The estimated revenue generated by this tax system would be around $2.2 trillion, assuming all households reported their income and paid their taxes in full. However, this estimate does not take into account the potential impact of tax avoidance or changes in taxpayer behavior in response to the new tax system. It is also important to note that this is a rough estimate and that the actual revenue generated could differ significantly depending on the specific details of the tax system and the income distribution of the population.

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