Our Insane Federal Tax Code
Our system of taxes is truly messed up. I have been filing and paying (or not paying) taxes for almost 50 years and can safely safe that the process becomes more convoluted and complicated each year. It also has created an entire industry of non-productive workers in order to process paper, quasi legal firms that live off negotiating reductions and ten times the required number of IRS workers (approx.. 100,000) that these taxes fund! Using the average Civil Service salaries from the prior chapter and an average tax & benefit rate of 25% this amounts to just over $8.9 Billion!
You have heard several potential solutions to this issue and here is my suggestion:
An average flat income tax of (5%) on all gross income except for capital gains. My math could be a bit off here, but the rate stated should be close to working. I would segment this into five categories with gross incomes at or below the poverty level at 0% (currently $25,000 for a family of 4). I would not provide incentives for larger families). For incomes from $25,000 to $50,000 I would make the rate 2%, from $50,000 to $100,000 4%, from $100,000 – $250,000 6%, from $250,000 – $500,000 at 8%, and all over $500,000 at 10%. These rates would become the automatic withholding and there would be no deductions
The above would not change either SS or Medicare tax rates.
I would completely eliminate capital gains taxes. Instead I would propose an annual tax on wealth (assets minus liabilities). The proposed rates would be: 1% for under $500,000, 1.5% for $500,000 – $1,000,000, 2% for $1,000,000 to $5,000,000 and 3% for $5,000,000 to $100,000,000 and 4% over $100,000,000.
Also, a flat national sales tax at 2% on all business sales at retail. I would completely eliminate corporate income taxes.
At this time I would not suggest any change to the excise tax structure.
Note: I have done my best to insure that the above would effectively replace the total revenue achieved by the current tax system and freely admit that the results may not be perfect, but you get the idea. These numbers can be tweaked to achieve the desired revenue results.