A New US Federal Tax Proposed :eek:

Discussion in 'Economics' started by billdick, Apr 27, 2008.

  1. billdick


    US Federal Tax Law is too complex and inefficient because it is “central planning” (social engineering) in disguise. :mad:
    Below is a suggested alternative, which fits on an index card, but there is one sheet of paper required for the definitions of various terms, like “income” and “gifts,” allowed as deduction, if to IRS qualified organizations and giving some summary explanation of intent, examples, etc.
    (To avoid making this post too long, that sheet will be my next post. I may discuss the transition period later.)

    Surely, my tax suggestion can be improved and you are invited to do so or simply to point out the flaws in replies.

    The main objectives are:
    (1) To define and efficiently collect taxes.
    (2) To simplify taxes. Thus eliminating most of the economic waste associated with tax lawyers and services.
    (3) To lower the taxes collected from most Americans by elimination of “loop holes” that tax lawyers exploit for the benefit of those wealthy enough to hire them.
    (4) To make cheating more difficult, by requiring annual report of one’s accumulated wealth.
    (5) To eliminate all tax costs for corporations. (Corporations pay no taxes, but must distribute their unused profits to individuals who do within 8 years, or any older profits are to be gifts paid to the IRS within 6 months.)

    Note: all specific numbers, such as this “6” and “8,” are only plausible suggestions made for clarity.
    Congress can change them when desired and you are encouraged to suggest better alternative values now.

    (6) To spread the IRS work load more uniformly during the year and eliminate the costs of making “estimated tax payments.” (Taxes and tax returns are sent to IRS by local midnight 35 or less days following your birthday annually. There are no “joint returns.” – Everyone 18 or older files an individual tax return.)
    (7) To allow simple periodic adjustments in the rate taxes are collected. (Congress can change the values of parameters in tax formula. This encourages, during times of peace at least, a “pay as you go” budget.)
    (8) To avoid the need for periodic modifications due to the effects of inflation. (All fixed dollar amount are expressed as multiples of an index. I prefer the Minimum Wage, MW, because it is well known and not subject to frequent changes or retroactive recalculation as is the “consumer price index” etc. Thus, for example, the threshold below which no tax on income is collected or “negative tax” is paid could be 1000MW.)
    (9) To partially or totally eliminate the “welfare system” if the “negative tax” option of item (8) is used.

    Note: Congress can still engage in “social engineering.” – Things like encouraging home ownership, marriages, well insulated houses, more efficient cars, student scholarships, etc. and the IRS can still distribute any associated funds, if that is efficient, but these economic central planning efforts should not be buried in the tax laws and forgotten as at present.
    This “Central Planning” should be transparent and subject to periodic review by Congress.
    (“Sunshine laws” that expire automatically if not renewed or modified to serve the currently perceived purpose.)

    Here is my suggestion for a simple (It fits on the two sides of a 3by5 “index card”!) federal tax law:

    If you are US citizen 18 or older, you owe T = 0.1(i – 1000MW - AGR) + 0.005(w – 10,000MW) but if either calculation is negative, then that term becomes zero. Here “i” is your total income* received during the 12 months preceding your birthday month, “w” is your accumulated wealth* at the end of that period, AGR is your “Allowed Gift Reduction” and MW is the Minimum Wage in effect at start of the current calendar year. If this year’s w exceeds last year’s w by more than income, i, you must attach an explanation explaining why, which includes the Social Security number** of the donor of any gifts, greater than 100MW, received. The AGR is 50% of the gift given to IRS qualified recipients if gift was less than 1000MW; if more than that sum, the AGR is as found in the declining AGR percent table. Most people should use the convenient tax tables as they never exceed the formula calculated taxes. See the accompanying definitions sheet or contact the IRS if you have doubts about these rules or terms. Taxes are due within 35 days following your birthday (or from your estate within 1 year following your death and annually thereafter while income to, and/ or assets in, the estate require tax payments.)
    *Wealth and income of persons during the 12 months preceding their 17Th birthdays is included, equally divided, in their parent’s (or principle guardian’s) “w” and “i” for all years in which that non-filing person is 17 or less.
    **If gift is from person or corporation without any S.S. number, then 50% of the gift is added to taxes due and only 50% increases the wealth value, w; however, when an IRS ID number is assigned, that 50% will be returned.
  2. billdick


    An earlier version of the "definitions, information and examples" sheet mentioned in the OP, can be found at:
    but I will only revise and post it here if some interest or suggestions replies are made.

    I wish to correct two omissions in the OP:

    (1) The suggested tax law applies to "resident aliens" as well as "US citizens."

    (2) In addition to AGR and 1000MW reductions of income, "i" there is the "AP" reduction of "i" mentioned in the above link. "AP" is the funds that have been Already Paid, if any, at your request. For example, your employer width holding part of your salary, but there is no requirement that any AP exist and it rarely would.
  3. "(4) To make cheating more difficult, by requiring annual report of one’s accumulated wealth.
    (5) To eliminate all tax costs for corporations. (Corporations pay no taxes, but must distribute their unused profits to individuals who do within 8 years, or any older profits are to be gifts paid to the IRS within 6 months.)"

    Commie pinko fag
  4. TGregg


    I'm sure the politicians will be lining up to limit the massive power of taxation. Who cares about lobbyists with more money than they can carry? So what if you have to run against somebody with millions from special interest groups? You can count on several hundred from the tax reform people.

    There are some things you can absolutely expect from Uncle Sucker:

    1. Government to get bigger
    2. As much taxes as they can get away with
    3. Complicated tax codes

    There are great reasons and plenty of support to do something about the AMT. It's far easier to fix the AMT than it is to implement a sane, rational tax code. But you can expect the AMT to continue to creep downwards.
  5. Ahhhh, the AMT. I pay the AMT rate mostly because I get too big of a deduction for the STATE taxes I pay. Fancy that... I have to pay more Federal tax because I pay too much other taxes....

    The AMT is mentioned by politicos who claim they "understand the AMT needs to be revised/repealed because it's hitting many people it was never intended to and is unfair". So why do we still have it? Because is raises more tax revenue.

    Another example of "what's right and fair isn't important"... "what matters is that we [Gummint] get more money". :mad:
  6. sprstpd


    Not only are you getting reamed by the AMT, but people who make more money than you don't have to pay AMT at all. It is pretty unbelievable how stupid our tax code is.
  7. It's far from stupid. Your reaction only proves that.
  8. sprstpd


    So the AMT, which was designed to make the wealthy pay a larger percentage in taxes now has the effect of raising taxes for the middle class while not affecting the wealthy. The only person that is stupid here is you, yessirreee.
  9. LOL, once again, you only help prove my point. At least to those who understand what is going on, which are few in numbers.

    Just because it seems stupid to YOU, does not mean it's stupid at all.

    Here is a clue. The AMT was designed to do exactly what it is doing.
  10. sprstpd


    I guess I view the world in terms of right and wrong. I don't think anyone can morally defend what the AMT has become. However, I understand your point, but your attitude sucks. I take it you put yourself in the select few "who understand what is going on." Give me a break.
    #10     Apr 27, 2008