When you mention Business Income Taxes, there are always naysayers who say that business don't pay taxes, only individuals do.
In a certain sense these people are correct, as the cost of these taxes will be passed on to consumers as higher cost. Essentially, Business Income Taxes are a hidden Value Added Tax - especially if you end the deductibility of wages and end the personal income tax for anyone who does not own a business or make an individual (not family or business) income under $100,000.00.
My thought is that most people will like the idea of being free from the responsibility to file income taxes. You could also save them heartburn by making the employer responsible for the payment of all non-retirement social insurance taxes (Medicare, Survivors of non-retirees, Disability). You can privatize the retirement contributions gradually through personal retirement accounts. Of course, if you did these things, you would reduce Gross, but not Net Income (unless you increased the Medicare tax at the same time to make it solvent, but this could be done with an increase of 0.5% of net income).
In essence then, a Business Income Tax is an invisible Fair Tax. Unlike the Fair Tax or Flat Tax, you can retain certain popular subsidies, such as the Child Tax Credit and Exemptions, which could be expanded to a refundable credit of $500 per month (which the states could match). You could credit home mortgage interest up to a point and pass this along to employees or allow employers to keep it if they provide no-interest loans to their employees. If you did these things, you could end most poverty programs and use this saving to make the tax subsidy more generous.
One important potential credit - although this would most likely be most effective at the state level - is to allow employees to designate where their contributions for education and corrections/mental health go - allowing workers to designate the Catholic school and hospital systems rather than the state.
In essence, this allows you to use tax reform to privatize most government functions, or at least make the public ones compete.
The Fair Tax does not do that. It leaves allocation decisions in the hands of the government.
Michael Bindner
Presidential Candidate
