Here in the not-potato fields, we sometimes fret and froth about that bugaboo of all bugaboos, taxes. No one truly likes to be taxed, but I think most folks realize that some levy is necessary to keep the Wheels of State crunching and grinding away. Personally, I'm okay with an income tax (I know, much like a dog that grows up with clipped ears is okay with them), and if left 100% to my own devices I prefer a 100% flat tax. So what would a federal tax look like in Smashtopia?
My team of experts would figure out what the magic # is for a flat tax rate. To keep it simple and round, let's pretend that the magic # is somewhere around 15%. I've read as low as 13% and as high as 20%, but the Federal Gubmint in Smashtopia would have rather less on its plate than the current one, so let's play at 15%. The tax structure would look like this:
Rate for "top" 10% of income earners: 20%
Rate for "middle" 80% of income earners: 15%
Rate for "bottom" 10% of income earners: 10%
All "second taxes" - cap gains, etc., are taxed at one tier lower (= zero tax on "second taxes" for "bottom")
Corporations play by the same rules.
And that's it. No exceptions. No exemptions.
"But Smasher, that's a progressive tax - it's not fair!"
That's right - it's a "flat, progressive" tax combo. But everyone pays, so everyone's invested in the idea of more efficient government, and the little bits of progressivism are blatant, unfair, and simple to see. And simple to calculate.
If states want to do something similar and throw in their own types of exemptions to encourage business, marriage, home ownership, whatever, then fine, have at it. But the Federal version stays simple and clean.
I like it.
Monday, December 14, 2009
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5 comments:
I hate progressive tax schemes, but even I could get behind this one. I like the lower tax for capital gains, and no exemptions/exceptions. Add deductions to that, and I think you've got something there.
Actually, the only thing I can think of an exception for is possibly health savings account.
Is "no exemptions" based on gross revenue, gross profit or net profit?
I'd move to some sort of consumption tax--either sales or VAT. Moving the tax to consumption means that everyone pays, even criminals and illegals, and if at the retail level, gives American goods an advantage over foreign, in both US and Foreign markets.
Anon-
Yes, no deductions either. And no need for weird health savings accounts because in Smashtopia the helath care market is truly free and not double-plugged by lawyers at one end and insurance cos at the other, so prices will be lower.
Sev-
I'd say I'd lean toward taxing profits not revenues. I favor an income tax over consumption mainly because we're already set up to tax that way. If a state wants to implement a straight higher VAT/sales then bully for them.
Considering all of the hidden taxes we've got now, 15% would be a savings for me.
I could go for something that's straightforward and so simple that a third grader could calculate exactly what his parents owe every year. Personal-income taxes should be very easy for math dunderheads like me to figure out...IMO.
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