Eliminate as many loop holes as possible. At tax increases must come with corresponding spending decrease/savings or a true audit explaining why cuts are not appropriate. Independent third parties would set public sector salaries in return or greater job security.
At the end of the day, you have to decide what you consider the true purpose of taxes. I view them as a means to pay for necessary services and assist the less advantage. I do not see them as a force for social change or as an equalizer.
First, I’d remove all taxes, except for personal income tax. No corporate income taxes, no payroll taxes, no sales taxes, no property taxes, no tariffs, no fuel taxes, etc.
I’d remove all deductions and exemptions except for one. No charitable, no mortgage interest, no child, no other special deductions, no business expenses, no pre-tax withholdings for retirement or medical, etc. All income and benefits from all sources would be lumped together. No separate schedules for interest, capital gains, etc.
Every citizen 18 and older files separately. No joint filing for spouses or partners. Everyone gets one exemption, equal to the median personal income. (I’d use something like the median personal income over a delayed five previous years. So, for example, the 2012 exemption would be based on the median over 2005 through 2009.) All income below the exemption is untaxed.
All income above the exemption is taxed at a flat rate. That rate is determined by dividing one-fourth of the effective expenditures of the government over those same five years by the total amount of taxable income. The expected excess is used to reduce any debt first, and the effective expenditures second.
The above would be set by Constitutional amendment so that Congress and the President would not be able to fiddle with it. Anything that they decide to spend money on will be paid for with taxes. Want to lower taxes? Reduce government expenditures. Want government-provided benefits? We’ll all be paying for it for very soon.
I’m not sure what the numbers for the exemption and tax rate would be now using this system. The median income would go lower because everyone is counted separately (no household incomes). But it would go higher because all income is counted (no capital gain loopholes). And I have no clue would the rate would be. For arguments sake, I’d guess the exemption is $50k and the rate 35%.
Again, it shouldn’t matter whether or not one is part of a family to grow the middle class. Any joe off the street who is single should be able to get a decent paying job. Extra people means extra income, but also extra expenses, so the net change should be zero. It feels like people need to be in families and need those tax deductions in order to simply stay above water in the middle class range. Ideally, that wouldn’t happen
If they are charities, sure. Why did you use the condom thing as an example? Think you’ll scare me off with references to kids and sex? I think sex ed should be taught in grade school quite frankly, with no option for parents to remove their kids from the teaching under any kind of objection. You can’t tell your kid’s math teach not to teach addition, and you shouldn’t be able to tell them not to teach them about sex and condom use
I would eliminate corporate taxes and property taxes at all levels (federal state and local). I would also eliminate estate taxes (I would only do this so people could pass their businesses on to their children without having to liquidate 20% of it or whatever to pay the tax). I would tax capital gains, dividends, interest and basically any transfer of assets to individuals (with the exception of estates) as income. Thus company cars, apartments, stocks, options, etc… would be treated as income and taxed accordingly. With estates, the basis would remain constant for the calculation of capital gains.
I would a have a standard deduction, say $25k or so with addition deductions of $10k or so for dependents (I believe that the money necessary to live at a subsistence level should not be taxed). Capital losses could be deducted. Health, childcare and education expenses also, with maybe a cap on the childcare and education expenses. Otherwise, no other deductions or subsidies allowed. I would have a simple progressive marginal tax structure, say 20% below $50k, 25% for 50-100, 30 for 100-250, 35 over $250 with the rate applied after all deductions taken. All adults need to file individual returns regardless of marital status unless they are being claimed as a dependent.
I understand that taxation is typically used by governments to encourage or discourage behaviors (i.e. distort the market), which is fine and understandable. That said, I would limit it by law to the imposition of sales taxes only. All sales taxes at whatever level of government and for whatever reason would be limited to 2 years maximum duration and would have to be passed into law again to be continued. No tax subsidies of any sort would be allowed; if the government wants to subsidize a certain industry or market segment they can either put sales taxes on the competing industries or just give a handout without calling it a tax break. If the government is trying to encourage social norms (I don’t think they should) like marriage or child birth, they can just give checks to everyone who gets married or has a kid. There is no reason to build this kind of stuff into our tax structure.
For those wanting to eliminate corporate tax, the downside I see with that is that it lets them accumulate huge coffers tax free. You may say, well corporations consist of stockholders, but actually, corporations can grow a life of their own independence of other cultures, and so taxing them, even just a little, will prevent them from becoming too institutionally powerful (think East India Company).
For those that want to tax capital gains as income, I largely agree, except that this will overtax long term gains due to inflation. I would ideally want to tax capital gains as income, except index the cost basis for inflation. I say ideally, because this would make it politically tempting to mess with the calculation of inflation.
The automatic tax increases/decreases sounds good. I’ve often wanted something like that but didn’t know how to set it up. That’s pretty brilliant: when you’re arguing for new or expanded programs, you’re automatically arguing for new tax hikes, and you can’t pretend to give people tax breaks for free.
My idea: income tax on whatever level necessary to fully fund the government, with rates fromm 0% to 90%. No sales taxes except for booze and tobacco, no property taxes (cities get to levy a sales tax). No deductions. No road tolls or streetlight fees or any other user fees.
I’d avoid the issue entirely, by not taxing organizations. Charities, corporations, NGOs, unions, etc would all be treated same under my tax regime–untaxed.
I’d count inheritance the same as any other income. If someone wants to pass a business on to their heirs, they need to incorporate.
That’s a good point. But I think corporations are better restrained by making them very accountable to their stockholders. Who will, at some point, start demanding greater dividends instead of a bigger corporate piggy bank. Reducing management’s control over the boardroom is critically important.
This is also a good point. I do not trust any inflation index enough to tie taxation to it. I’d rather keep the tax code simple and if that means capital investments are penalized by inflation, so be it.
I agree. Only citizens should be taxed, only citizens can vote, and only citizens can engage in political speech. Outside the realm of this thread, but there you go.
So you would have the company (or the heir) go into debt to pay the inheritance tax?
I think it is better to use other methods to keep corporations in line. With taxation comes a demand for benefits that I don’t want to give.
Many odd ideas here, fostered by the rich and the libertarians.
Income tax. There is exactly ZERO benefit to us working stiffs with a “flat tax”. A flat tax just means there is one rate. Every single revenue neutral one I have seen has us middle class dudes paying quite a bit more while the rich pay less and the very rich pay a LOT less. Yes, instead of looking at a little chart to figure out your taxes in a progressive tax rate system, you could figure it with a calculator. Now, my Bro and I crunched the numbers once on one of the most popular flat tax schemes. We’d pay about 5000 more. Who here will raise his hand and say the ability to use a calculator rather than a chart is worth 5 fucking thousand dollars?
Now- a tax without any deductions, just one “standard deduction” and then figure the taxes- that’s not a “flat tax”. It has nothing whatsoever to do with a 'flat tax. I can get behind the idea of there being less deductions, and even phasing out ALL deductions.*
I can agree with Ludovic about capital gains taxes. Yes, ther’d have to be a little chart to adjust the basis on assets held over say, 5 years. Very few are anyway, it’s not a big problem. Most capital gains taxes are shorter term, the results of gambling on the stock market.
Estate tax. A few years ago, the Pubbies went hunting for a small family farm or business that had to be sold to pay the Federal Estate tax. They might as well been hunting Unicorns. **Doesn’t happen. **First, the exclusions are too high to have any but the very largest “small businesses” pay a nickel. Next, with any sort of tax planning or just having the business be a partnership or Corp (which is just good business) there’s nothing to worry about. ** NO SMALL FAMILY BUSINESSES HAVE TO BE SOLD TO PAY THE FEDERAL ESTATE TAX. ****
Most of the funds in the estate have never been taxed. There’s no “double taxation”. That’s another Pubbie lie. Most are unrealized capital gains. Only Scrooge McDuck keeps his assets in a money vault. Everyone else invests them.
The exclusions are so high that there is no reason to feel sorry for anyone who has to pay. And, if they do have to pay that’s because they were complete IDIOTS and didnt consult a expert and do proper estate planning. It’s really a 'stupidity tax".
certain deductions, like business expenses for a Sch C, etc will have to remain. Some retail businesses operate on a margin of less than 10%. Obviously things like CoGS, wages paid, etc must be deductable for a real business.
** Probate fees and state inheritance taxes can eat up a estate, true.
My only change is that I want ALL taxes to be like Income Taxes.
I don’t want to pay tax when I buy things. I don’t like having to pay property taxes seperately.
I want one form that I fill out once a year to determine what I owe/am owed.
Since I am Canadian, I pay a hell of a lot of tax (about 50%, possibly more). I am pretty good with that since I get to live here and enjoy all the benefits.
Yeah, the idea is to get these non-tax issues out of the tax code, that way they are more transparent because the congress would have to keep appropriating the money for these programs. Some of these alternative energy tax incentives have been around for DECADES, how much longer before we realize that the private sector is about as likely to create the technology for alternative energy as they were to send a man to the moon 40 years ago.
The EITC got a lot bigger in 1996. And you would simply be replacing EITC fraud with welfare fraud. Half dozen of one and sic of another in my book.
So if someone has no assets other than a $2 million dollar baseball card collection that he wants to leave to his grandchild, there is a tax but if he had a $1 million dollar collection and a $1 million dollar house, then no tax? How do you justify that?
Thats not means testing. taking away social security if you make too much money is not like taxing social security if you make more than the poverty level.
What are you talking about? Social security is not paid by the states.
So a universities and other no-profit institutions can accrete wealth forever and never get taxed on any of that income? Its not like they are going to pay dividends.
Loss of the charitable deduction would reduce charitable giving severely, but it is a tax expenditure so I guess its in line with my basic premise. Eliminating the mortgage interest deduction would rival 2008 for real estate price destruction but once again, perhaps something better done by appropriations.
Not enough income to fund the government with that sort of tax base.
Flat rates are retarded.
I wouldn’t be surprised if there wasn’t enough money in your tax base even if we collected all the money on income over 50K (remember, you are giving up corporate, payroll and estate taxes).
The deduction for dependents doesn’t come close to the cost of supporting a child, especially if we say that all moms have to work too and we have to put the kids in daycare.
The exact opposite. I wanted to show you that you pick and choose which charities you think are worthy.
Yeah if they were teaching elementary school kids about condoms, I’d probably put my kids in private school
A lot of that income is never going to get taxed.
This is not how it works in closely held corporations. If there is a tax advantage, these closely held corporations not pay out dividends except when the shareholder needs the money for some form of consumption thereby converting their income tax into a consumption tax. Or maybe they will just borrow the money from their closely held corporation.
The inflation index is pretty non-political and has been used in all sorts of way inside and outside of the tax code without shenanigans.
Citizens United would like a word with you.
Well thats your fault for making less than $352K/year… slacker.
There are several reasons for this. Most of the time there are sufficient liquid assets to pay the estate tax. Where there aren’t sufficient liquid assets to pay the tax, the IRS lets you pay off that estate tax over a period of up to 14 years.
If that were true, I would advocate getting rid of it. There is a reason that heirs to large fortunes donate so much money to get Republicans to repeal the tax. It means billions of dollars to them that they earned by being born to wealthy parents.
Without the tax incentives, there are very few places where solar power achieves grid parity (maybe thats the answer, to have solar farms where they can achieve grid parity and use nucelar elsewhere but why keep subsidizing this technology through the tax code).
Yeah but they can’t get the earned income tax credit. They might be able to get credits for their US borne children if the children have social security numbers but they cannot get the EITC without a work-valid social security number.
Not when you’re dead.
Or do you mean cases where the heirs of the decedent live int he home? In which case, I would ask, why isn’t the one MILLION dollar exemption enough? Why add another incentive for home ownership? As if we don’t have enough with the mortgage interest deduction and the exemption for gains on primary residences.
Oh OK. I thought we were talking about social security on that point.
True. But a few years ago, solar had such a long break-even point only a few bought solar panels for their homes. Now, with the better tech and cheaper manufacuring that more sales have brought, you can get a break even point in 5-10 years. It’s now worth it to some. That never would have happened without credits.
Many, many illegals have a “work valid ssn”.
Yes. The dec’d children and such should be able to keep living there without worries.
DECADES. We’ve been subsidizing this crap for decades to let the market figure it out. We put two men on the moon in less than a decade.
Yeah but those are not THEIR SSN’s someone else files those taxes and gets those EITC.
You think they should be able to live ina 2 million dollar home without worries, while some other orphans should make do with half a baseball card collection?
The mortgage interest deduction artificially inflates home prices; that’s partly to blame for the housing bubble that put us into this ongoing morass. But I agree that you wouldn’t want to shock the system by ending it cold turkey; it would need to be phased out over 10 or 15 years.
Two main revenue streams: A “net income” tax (net cap gains, + salaries, commissions, wages, etc.) (~50%) and a wealth (net worth) tax (~1%). Corporations pay it too. About half of each would actually be redistributed among the adult population as a negative income tax (and that refundable tax credit is in place of your personal exemption).
So with about 25% of GDP and 0.5% of national net worth coming into the government’s accounts, this would rake in so much money, we might actually pay off the federal debt* too* fast.
Just FYI, plenty of countries with no mortgage interest deduction were victims of the real estate bubble. We have had a mortgage interest deduction for decades without triggering a global financial crisis. The precipitating factor wasn’t the mortgage interest deduction or fannie mae or the CRA, all of these things have been around for a long time and while they may have made homeownership attractive and attainable, they were about as responsible for the financial crisis as the 4th lane of a highway is for a 22 car pile up caused by a drunk driver.
Any sort of wealth tax on portable wealth is a really good way to get people to move that wealth where it wont be taxed. People may not be willing to move to the Cayman Islands to lower their tax rates but they are more than happy to move their money there. Just ask Mitt.
All income is taxed as ordinary income, except that the basis for capital gains income is indexed to inflation (if you make less than inflation for 20 years on something, you shouldn’t have to pay taxes on the nominal “gains”).
Get rid of all deductions. Get rid of all the weird special tax incentives that pop up every year. If the government wants to incentivize people to do something, pay them directly.
Get rid of payroll taxes and make them part of the normal income tax. Get rid of corporate taxes. The place to tax income is when it goes to a human.
Progressive rate structure, probably pretty close to what we have, although I’d like to see more and higher brackets at the top.
I’m also in favor of phasing these changes in over a long period of time to minimize shocks, and probably allowing some kind of grandfather period. Say, for the home mortgage interest deduction, we declare that we want it totally gone within 30 years, so we’re going to reduce it by 2 points a year for 10 years, then 3 points a year for 5 years, and so on. Of course, our political system can’t actually accomplish anything like that, so I realize this is a pipe dream.