I believe the goal of tax reform should be simplicity, but dislike the notion that the rich and poor should be equally burdened, hence my dislike of a flat tax. I suggest that a tax curve is the answer. Along with this, a system with no deductions and no exemptions is critical. The Income Tax should be based on income, period.
The curve would be designed such that under a certain level, little or no tax is paid, and at the highest income it flattens into a flat tax. The curve would have income as the X axis and Tax Owed as the Y axis. Or even simpler: Tax rate as the Y axis. To determine the tax you owe, merely find your income on the X axis, go up to the curve at that point and the Y value tells you how much you owe (or what percentage you owe). Simple.
Eliminating exemptions and deductions achieves the following:
* For those employed by someone else with no outside income, there would be no need to do anything at the end of the year (assuming withholding). Their account will balance by default.
* It prohibits Congress from complicating the tax code!
* It isolates the tax code from social engineering, loopholes and influence.
* It increases your privacy, since only income is relevant to what you owe.
* It reduces record keeping and the need for tax experts!
* An equitable rate is easy to determine and should be lower than what is now for the average citizen.
The only thing Congress would be allowed to tamper with is the shape of the curve itself. That's OK with me.
Along with the tax-avoidance perks that the rich would be denied by this scheme, I know that hallowed middle-class perks would be gone too. But why should the Federal government be subsidizing whether you have children or not, or buy houses? I don't think it should.
I like this plan, it seems fair enough, but not drastically different from our current system, so it would be very easy to implement. Thats the part of this plan I like the most. It seems like it could actually be implemented.
I would make a motion for this if I knew how. [I'm new here.]
An important aspect of this scheme is it allows citizens under a threshhold to pay zero income taxes by defining the curve such that the Y value is zero for any X under the minimum. And it turns into a flat tax above the income determined to have reached the highest tax rate. Between those two the curve increases gradually with income until the flat level is achieved. It also avoids bracket jumps.
The only way you can keep congress from reverting this tax back to what we have now, is with a constitutional amendment.
In fact, there is little difference in what you propose and what we now have, other than 25,000 pages of priviledges and burdens. The personal exemption and standard deduction allow those at the bottom to escape taxes, the top rate is a flat tax, and the tax tables in between are more or less on a curve.
The power to tax is the power to destroy. We need to get taxes away from wages. If it weren't for withholding, we would have had a tax rebellion years ago. People don't seem to miss what they never have in their hand.
It is a little complicated than it sounds! What do you count as income? Wall Street has no limit to their imagination in how they pay people. Do giving people stocks count as income? What about people who trade items for services? What about people who give you a paid vacation for a service or item? There are a million such examples. And congress has been lobbied to death so they left tons of loopholes in the system.
JFK---I think it is workable... if you steal some of the lines from the current code. For instance paying someone in stock is taxed already as income or a bonus. Trips given to an employee is taxed as a bonus. Ditto with company cars for private use and expense accounts used for personal items are taxed as a bonus. Capital gains on sales, any trading services also should be taxed as a value for work bonus. The big issue may be in determining a cost structure for gifts to employees and perks. But all in all it sounds like a workable plan. Although I think an income tax form and w-2 will forever be in our culture.
I think you mean wages.
This would not be fair to workers, who would be paying the taxes of people who live off their dividends and capital gains.
Xianleft_michael. Capital gains and dividends are currently taxed as income or long/short capital gains. Maintaining the taxes on these passive types of income would allay all the unfound fears that the "rich" don't pay any taxes. If you have ever cashed a US EE bond you would know Uncle Sugar always gets his cut. The only dividends that are tax free are municipal bonds. They could be taxed too. Any "worker" with a 401K or IRA has tax deferred gains. The tax man cometh for every one.
I am for a more radical change, the shifting of the tax burden from workers to their employers, who collect the taxes anyway. I would still include many of the deductions and credits - like a capped home mortgage interest credit (as proposed by the President's Task Force on Tax Reform) and would also include a pro-life $500 per month refundable credit for each dependent child and spouse to be paid to the employee with each paycheck.
The self-employed would still file and partnerships would file as separate entities on behalf of the partners. Also, individuals making over $100,000 would file taxes and pay a small surtax of between 3% and $15%. This surtax would fund overseas military operations, net interest on the debt, the transition to Social Security Privatization, the forgiveness of unreasonable debt to the IMF/World Bank and the repayment of the national debt. Once these items were all zeroed out, the surtax would sunset.
Michael Bindner
Presidential Candidate
Nothing ever sunsets when the government can find some pork to spend it on.
HUH?
HC I was talking about the surcharge tax that Xa_mich is proposing. The politicians can say some tax will drop off at some future date but like the telephone tax instituted for the Spanish American War it will take a 100 years.
The telephone tax is a trivial little thing, or was. A tax on the wealthy will likely not last one minute longer than necessary, as the folks who pay it will be quite vocal about its suspension when the time comes to do so. Their track record at getting their taxes lowered is pretty good.