Taxes

The Left Says

Taxes are how we pay our fair share to support all of the vital functions of government. Look at Sweden & Denmark. The tax “burden” has left them with some of the highest standards of living in the world.

The Right Says

Taxes are a necessary evil. They essentially stifle the free flow of capital in a society, promote waste and inefficiency at the governmental level (because they can always just be raised), and due to their progressive nature in this country – unfairly target those who’ve had more success, hindering their ability to innovate.

The Solution

Taxes currently do three things: They raise revenue for the government; they incentivize certain behaviors; they dis-incentivize other behaviors. Let’s start by simplifying. First, everyone pays, and everyone files individually! Doesn’t matter if you’re married or a minor. If you had income over $1,200, it gets taxed. Start the brackets at 5% up to the poverty line (currently at about $12,000 for an individual) Peg the next brackets at multiples of the Median Household income (currently around $60,000) So:

10% at $30,000;

15% @ $60,000;

20% @ $90,000;

25% @ $120,000;

30% @ $180,000;

35% @ $240,000;

40% @ $300,000;

45% @ $360,000;

50% @ $420,000;

55% @ $480,000; and

60% from $540,000 on up.

Second, NO DEDUCTIONS except for Charitable Giving and Retirement Savings (ROTHs for all, capped at 10% total income).

Third, ALL income is regular income.

Fourth, set the corporate tax rate at 35%, with only two deductions; Charitable Giving, and all domestic business expenses (except for salaries above 100x the lowest paid worker). Because removing the deduction for foreign business expenses is staggeringly huge, implement that shift over 20 years, reducing the eligible deduction by 5% per year. Large expenses can be amortized over any number of years, based on the actual price paid, and inventory is done on a FIFO basis. If Capital Gains taxes are deferred until they are realized, then average the accrual over the number of years the asset was held, and simple pay those back-taxes, plus interest¹. Unrealized capital gains are realized at death. Foreign income is treated the same, with the exception that foreign business expenses are then deductible (from the same country).

No loopholes, no havens, no trusts, no credits, no fudging. Filing your taxes should take about 5 minutes.

Fifth, add a Financial Transactions Tax at 0.5% of the traded value (Basically a national sales tax on stocks and derivatives transactions) This amounts to $5 on every $1,000 that changes hands, or about $1.3 billion a day in today’s market.

¹ Time Magazine, January 30th, 2019: …Wealth Tax is Wrong Solution to the Right Problem.