Download or print from Google Documents
POSITION PAGE
Taxes: Let's Start Fresh
CHANGE
Scrap everything and start fresh with a broad-based system that draws from three revenue sources: sales transactions, wage income, and investment income.
POSITION PAGE
Taxes: Let's Start Fresh
CHANGE
Scrap everything and start fresh with a broad-based system that draws from three revenue sources: sales transactions, wage income, and investment income.
- No deductions or exemptions
- One $25,000 pre-tax exclusion for each taxpayer
- No employment taxes (Social Security, Medicare, etc.)
- No filing of annual tax return for most individuals
- No commodity or excise taxes
- No corporate taxes
SOLUTION
- National sales tax: 5% paid on the sale of all goods and services.
- Distributed corporate earnings that are not tied to an individual U.S. tax ID are taxed at the single personal rate.
- Personal income tax
- Income from labor and capital is taxed at the same rate.
- A single steady rate that excludes the first $25,000/year.
- Tax deferral on the first $25,000/year of new savings and investments in a single account; continual "catch up" contributions; phase out 401(k) plans and Roth IRA.
- Withdrawals from the tax-deferred account are treated as income with no penalty.
- Capital gains and earnings within the tax-deferred account are not taxed until withdrawn from the account.
- Capital gains and reinvested earnings on any asset outside the tax-deferred account are not taxed until the asset is sold or those gains and earnings redeemed.
- Assets can be transferred to another owner and are not taxed until the asset is sold or those gains and earnings redeemed.
BALANCE
- Eliminating deductions and exemptions lowers the single tax rate.
- Because of the $25,000/year exclusion, the system remains progressive – that is, individuals with greater income pay a higher effective tax rate even though there is only one marginal tax rate.
- Eliminating employment taxes removes a cost to hire and retain employees.
- Eliminating taxes on traceable distributed corporate earnings removes double taxation of investment income.
- Equal treatment of income from wages and investments makes the system equitable.
- A national sales tax means that everyone contributes.
- Tax rates must remain constant across economic cycles to pay off debt in good times and take on debt in bad times.
