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Simple is all you're offering; "fair" does not include favoring labor over capital. "Job creation", while a beneficial side effect, is not the goal of capitalism; efficiency in production is the goal. That is how wealth is created.
While I agree that there are abuses in the awarding of tax benefits, your approach is dramatically more unfair and inefficient, and flies in the face of basic common sense. We have a system by which business income is determined, and it includes all inputs to production; machinery, plant, raw materials, marketing, finance, all play a role and deserve equal consideration as part of the cost of the product or service produced. You would throw out all of those costs and tax any revenue created without significant amounts of labor. Let's assume we have a business that sells $1 million worth of widgets produced in a factory and the labor cost is $100,000, and their net profit is 5%. Under your system, they would be taxed at 18% on $875,000, or $157,500, but their net is only $50,000. That factory would never be built under that scenario. That doesn't seem to be an economically sound tax regime, nor would it aid job creation.
No, the beginning for tax reform is not to throw out hundreds of years of experience and knowledge about what, in fact, comprises business income. The beginning is to look at credits and deductions that do not align with normal business income principles and decide whether or not those tax advantages are fair or unfair, and then to phase them out slowly to avoid inevitable unintended consequences. For instance, is it fair to offer credits for alternative energy like solar and wind? Environmentalists would say yes, because it will ultimately lead to cleaner and renewable energy which the current economics do not support; others would say it's just a gift to the "green" crowd from a liberal administration. There are no simple answers to these issues and they certainly cannot be solved by your one line tax "plan." Sorry.
Right now businesses pay upwards of 40% on all the income their lawyers and accountants can't find a legal way to exempt and corruption is running rampant while spending millions on lobbying to buy tax favoritism from congress.
18% with a single deduction + payroll will allow businesses to stop spending so much on accountants, lawyers and lobbyists instead of expanding their businesses through good old fashioned hard work.
Stop focusing on the trees and look at the fucking forest, Bud.
Maybe we're not on the same page. Your plan as stated is to tax all income that can't be offset by payroll and an additional $25,000. I have already provided an example of a company with $1 million in sales, $100,000 in payroll and $50,000 in net income after all business expenses (because you know, they have to buy raw materials, equipment, rent or buy a building, etc), and you want to tax that company $157,500, even though they only made $50,000. Current law would tax them at 35% of $50,000 ($17,500). Under your system as I understand it, that company will cease to exist. Now maybe you really mean that we will tax business income as currently defined at 18% (as a flat tax) and do away with preferential credits and deductions that are in addition to what would be allowed under normal business income and expense principles; that is a position that could be debated. Or maybe you don't understand how our current system works. In either case, your forest won't grow trees under your tax plan as stated. If I have misunderstood your OP, please elaborate (without resorting to insults would be preferred, but either way).
Not so much.
Simple is all you're offering; "fair" does not include favoring labor over capital. "Job creation", while a beneficial side effect, is not the goal of capitalism; efficiency in production is the goal. That is how wealth is created.
While I agree that there are abuses in the awarding of tax benefits, your approach is dramatically more unfair and inefficient, and flies in the face of basic common sense. We have a system by which business income is determined, and it includes all inputs to production; machinery, plant, raw materials, marketing, finance, all play a role and deserve equal consideration as part of the cost of the product or service produced. You would throw out all of those costs and tax any revenue created without significant amounts of labor. Let's assume we have a business that sells $1 million worth of widgets produced in a factory and the labor cost is $100,000, and their net profit is 5%. Under your system, they would be taxed at 18% on $875,000, or $157,500, but their net is only $50,000. That factory would never be built under that scenario. That doesn't seem to be an economically sound tax regime, nor would it aid job creation.
No, the beginning for tax reform is not to throw out hundreds of years of experience and knowledge about what, in fact, comprises business income. The beginning is to look at credits and deductions that do not align with normal business income principles and decide whether or not those tax advantages are fair or unfair, and then to phase them out slowly to avoid inevitable unintended consequences. For instance, is it fair to offer credits for alternative energy like solar and wind? Environmentalists would say yes, because it will ultimately lead to cleaner and renewable energy which the current economics do not support; others would say it's just a gift to the "green" crowd from a liberal administration. There are no simple answers to these issues and they certainly cannot be solved by your one line tax "plan." Sorry.
Right now businesses pay upwards of 40% on all the income their lawyers and accountants can't find a legal way to exempt and corruption is running rampant while spending millions on lobbying to buy tax favoritism from congress.
18% with a single deduction + payroll will allow businesses to stop spending so much on accountants, lawyers and lobbyists instead of expanding their businesses through good old fashioned hard work.
Stop focusing on the trees and look at the fucking forest, Bud.
18% with a single deduction + payroll will allow businesses to stop spending so much on accountants, lawyers and lobbyists instead of expanding their businesses through good old fashioned hard work.
Taxing companies at 18% of revenues, after you subtract payroll and $25,000, won't leave them with any money to expand.
They borrow money to expand, can't deduct the interest.
Buy equipment, can't deduct that expense.
Buy raw materials, can't deduct that either.
Just how high do you feel profit margins are in our economy?
Right now businesses pay upwards of 40% on all the income their lawyers and accountants can't find a legal way to exempt and corruption is running rampant while spending millions on lobbying to buy tax favoritism from congress.
18% with a single deduction + payroll will allow businesses to stop spending so much on accountants, lawyers and lobbyists instead of expanding their businesses through good old fashioned hard work.
Stop focusing on the trees and look at the fucking forest, Bud.
Maybe we're not on the same page. Your plan as stated is to tax all income that can't be offset by payroll and an additional $25,000. I have already provided an example of a company with $1 million in sales, $100,000 in payroll and $50,000 in net income after all business expenses (because you know, they have to buy raw materials, equipment, rent or buy a building, etc), and you want to tax that company $157,500, even though they only made $50,000. Current law would tax them at 35% of $50,000 ($17,500). Under your system as I understand it, that company will cease to exist. Now maybe you really mean that we will tax business income as currently defined at 18% (as a flat tax) and do away with preferential credits and deductions that are in addition to what would be allowed under normal business income and expense principles; that is a position that could be debated. Or maybe you don't understand how our current system works. In either case, your forest won't grow trees under your tax plan as stated. If I have misunderstood your OP, please elaborate (without resorting to insults would be preferred, but either way).
And you're right... For businesses, especially manufacturing, limited costs of production like raw materials and power need to be removed from the profit picture before calculating the tax.
Corporate jets and marketing trips to Aruba?
Right now businesses pay upwards of 40% on all the income their lawyers and accountants can't find a legal way to exempt and corruption is running rampant while spending millions on lobbying to buy tax favoritism from congress.
18% with a single deduction + payroll will allow businesses to stop spending so much on accountants, lawyers and lobbyists instead of expanding their businesses through good old fashioned hard work.
Stop focusing on the trees and look at the fucking forest, Bud.
18% with a single deduction + payroll will allow businesses to stop spending so much on accountants, lawyers and lobbyists instead of expanding their businesses through good old fashioned hard work.
Taxing companies at 18% of revenues, after you subtract payroll and $25,000, won't leave them with any money to expand.
They borrow money to expand, can't deduct the interest.
Buy equipment, can't deduct that expense.
Buy raw materials, can't deduct that either.
Just how high do you feel profit margins are in our economy?
Oops!
I still stand by fair and simple and the simpler the better.
