The standard federal tax deduction is $12.5k and average US income is about $30k and US GDP is around $20 trillion and GDP per capita is about $60k. So you have about 50% of the economic output to work with. And you're right, average income tax per capita is $10k. Maybe $100k or even $10k is a better ball park starting point for a "universal tax credit". I just like the idea of setting the number higher than average earnings. I did hand wave around the assumption that in a scheme like this tax credits wouldn't be worth $1 on the open market but $1M is totally ludicrous I know. It was late and I didn't think anybody would notice haha. Got your attention though!
The general idea is that money could be more productive being added into the economy from the bottom rather than the top. The interesting idea is the marketplace and granting people some intrinsic value and some reason to participate in the economy other than just through labor output. Also not sure how to pay for healthcare, the military, infrastructure and social services if you mostly eliminate the federal budget. If the federal government took a cut of the transaction fees that could be another way to fund it. It's hard to define what "excess" profits are as well, $1B was also a totally arbitrary limit and most businesses don't create that much profit and you could game that system in a lot of ways. It's also difficult for small business to compete with large business in a marketplace for tax credits but I assumed that if you work for a company and also donate your tax credits to your employer that would convert to a cash bonus at some beneficial exchange rate for both. I imagine that's what the think tank would work on. Maybe I'll call it the "Institute for Science Fiction Economics".
Corporate tax rates are around 12% after deductions and constitute less than 20% of current taxation. If you raise those corporate tax rates to 96% above a certain threshold you collect less than 8-times the current revenue. Even 8 times current revenue would get you less than $6 trillion in revenue from corporate tax which would let you improve your tax deduction from $10,000 to $20,000 if you wanted all the tax credits to get purchased and government to collect no tax revenue. You've now completely reformulated all of how corporations work and obliterated a large portion of shareholder revenue and you need eight more equally large changes to get to $100k. I don't think you have them.
I do still think it's kind of a neat idea but at lower amounts, as you've pointed out, it also doesn't move the needle much because corporations don't actually pay that much tax in the first place compared to the size of the population of the US. Allocating a chunk of any real money to a 330+ M population really adds up quick too. I think the motivation (as one of the parent comments suggested) was to try and provide some kind of basic income but also to boost the "value" of a worker in some way so we don't all get replaced by robots and GPT3000. The bigger problem right now isn't employment though, it's wages and inflation, and this doesn't really help that much.
I did finally look at some tax revenue numbers instead of just wildly guessing. :) The bottom 50% of taxpayers (75M people) pay on average $650 in taxes and their total contribution is 48 billion, around 3% of the total taxes paid [0]. In 2019 revenue from corporate income tax was $230B, but that looks to be closer to 10% of the total federal revenue from income tax for that year on this other chart [1]. Interestingly those two sources don't match but whatever, it's close enough for government work.
So, even a 3k floating tax credit just for that bottom 50% segment instead of everyone would "cost" the system about $225B for those 75M people which is pretty close to the corporate tax revenue. So let's see what that would look like. If you doubled the corporate tax rate to pay for all this then you'd have $460B from corporate tax to start, then $225B credits are redeemed, leaving $235B. Of course, nobody is going to pay $3k for $3k of credits, so the exchange rate would probably converge to closer to the tax rate something like 10:1, and now you're talking about 300 bucks per person and another $25B in "cost" to the corporations to buy their tax credits back. So then you've effectively increased corporate taxes to $260B which is like +13% after all the credits are redeemed and you've only given half the population 300 bucks.
I think the amounts are definitely too low for anyone to care. Even at 10x it isn't that interesting and as you point out, you could 100x it and tax corporations at a 1000% rate just to get into poverty level universal basic income territory.
It would be a lot easier to just eliminate taxes on that demographic and maybe bump the corporate tax rate by 20% to cover it without all this credit reassignment nonsense.
Maybe the current system isn't the worst after all? Maybe I'll try to come up with a plan to fix the health insurance system in this country instead, it's probably easier. :)
[0] https://taxfoundation.org/publications/latest-federal-income... [1] https://www.taxpolicycenter.org/statistics/amount-revenue-so...
