[Speed Gibson,
Wednesday April 20, 2005 at 12:40am]
Tax Reform My Way
I see a few posts regarding tax reform out there. Here's my view:
1. All taxes are basically income taxes.
The more you make, the more you generally spend. Simply shifting to a consumption tax doesn't change all that much, except to exclude "unearned" income like dividends.
Regardless, spending levels are too high now to make a national sales tax work. The tax rate would be so high that even though we now would receive our gross pay, extensive smuggling and black marketing would occur.
The Income Tax model basically works. All other excise and hidden taxes should be eliminated, added to the Income Tax.
2. Income is Income is Income
There should be no exclusions. Not your pre-tax benefits, not your capital gains, etc. Earned and unearned income are the same, except that the basis of capital gains are indexed to inflation. And don't give me that "hurts investment" argument - you're engaging in social engineering just like the liberals. There are no more tax-free bonds, either. And no more 401-K exclusions for contributions. The interest in the 401-K can accumulate tax-free until withdrawal, however, like any other investment.
Interest income is NET interest income. If your net interest income is negative, you can't deduct it - you're simply spending money on interest. But this gives considerable room for young investors, whose interest income won't like exceed their credit card or mortgage interest.
3. Income is taxed only once.
No more estate tax, the most egregious case of double taxation. The corporate income tax must also die, since dividends are taxed twice in today's system. Besides, it's regressive and in effect taxes your after-tax dollars as you spend them.
4. All taxpayers with the same income pay the same tax.
There are no deductions or "credits" of any kind, since these subsidies can be paid directly outside of the tax system. There are no dependents. The only exception is marriage, where joint filing is the only option. It should make no difference if one spouse makes almost all of the income or if it's 50-50.
Note that this does not preclude a graduated bracket structure.
1. All taxes are basically income taxes.
The more you make, the more you generally spend. Simply shifting to a consumption tax doesn't change all that much, except to exclude "unearned" income like dividends.
Regardless, spending levels are too high now to make a national sales tax work. The tax rate would be so high that even though we now would receive our gross pay, extensive smuggling and black marketing would occur.
The Income Tax model basically works. All other excise and hidden taxes should be eliminated, added to the Income Tax.
2. Income is Income is Income
There should be no exclusions. Not your pre-tax benefits, not your capital gains, etc. Earned and unearned income are the same, except that the basis of capital gains are indexed to inflation. And don't give me that "hurts investment" argument - you're engaging in social engineering just like the liberals. There are no more tax-free bonds, either. And no more 401-K exclusions for contributions. The interest in the 401-K can accumulate tax-free until withdrawal, however, like any other investment.
Interest income is NET interest income. If your net interest income is negative, you can't deduct it - you're simply spending money on interest. But this gives considerable room for young investors, whose interest income won't like exceed their credit card or mortgage interest.
3. Income is taxed only once.
No more estate tax, the most egregious case of double taxation. The corporate income tax must also die, since dividends are taxed twice in today's system. Besides, it's regressive and in effect taxes your after-tax dollars as you spend them.
4. All taxpayers with the same income pay the same tax.
There are no deductions or "credits" of any kind, since these subsidies can be paid directly outside of the tax system. There are no dependents. The only exception is marriage, where joint filing is the only option. It should make no difference if one spouse makes almost all of the income or if it's 50-50.
Note that this does not preclude a graduated bracket structure.