CALCULATOR for the Government to make the Fair Policy of Tax Rates
In this calculator Harmony in Gradation is used to measure the level of fairness of a government’s economic policy in terms of determining income tax, The formula for determining income tax used in this calculator can be seen in reference 1 and/or reference 2 When using this calculator, each country must determine how many groups of tax rates, if desired, there are three levels, just for example, then the citizens of the taxpayers are divided into three groups: the rich, the middle, and below the average. Each country is free to decide whether to make 2, 3, or 4, or more income groups that each income group will be subject to a fair tax rate, where the fair definition here is that the tax rate will be greater with higher income.
The parameters that determine the tax rates are the number of income groups, Fairness Level, Tax target, Target of GDP, total population and the amount of employment that becomes the taxpayer.
In this calculator, a new parameter: “Fairness Level”, which is the level of honesty or compliance of citizens in terms of paying income tax, whose value is among 0.1 to 1.0. If citizens become more obedient then tax rates will seem fairer, but if more disobedient citizens then tax rates will be more unfair, meaning the percentage of taxes will be higher compared to tax rates in the country where all citizens are honest. So as a result of dishonest or disobedient citizens, an impact on a dutiful citizen will pay a greater percentage of tax.
The formula used here is to produce a perfect “Fairness over Inequality”, in the sense that the distribution of tax percentages to groups of people is exactly the same as the income distribution of these groups. Thus, the index of Harmony in Gradation is the same as one, and it can be proven that the state income from the income tax sector will be the maximum. In a real implementation, the government can modify the results of the calculation, but it must be remembered that this modification action will cause the state income from the tax sector to be not optimal.
Procedure: 1. Fill in the N = the number of group of the tax rate, then ENTER; 2. Fill the GDP per capita of each group, the Fairness Level, Tax target, Target of national GDP, total population and the amount of employment that becomes the taxpayer, and 3. Enter CALCULATE.
|Income per capita Group 1:|
|Employment (the income taxpayer):|
|Tax Target from income tax:|
|Gross Domestic Product:|
|Fairness Level (Honesty Level of taxpayers):|
|The Number of Tax Rate Groups (N):|
|Percent Tax Rate of Group 1:|