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If You Could Design a Tax System From Scratch.....

Madeline

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What would it look like?

Let's assume for discussion sake the following:

GDP (Gross Domestic Product) is $200 Trillion.

Government needs $20 Trillion annually, and will have no non-tax revenues.

Excise and other taxes can be changed by Congress and do not affect foreign trade, etc.

Any form of taxation is legal.
 
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Madeline

Madeline

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In my view, a tax system should have as many of the following qualities as possible:

1. Enforcability. Fraud and avoidance should be as difficult as possible; everyone who owes should pay.

2. Simplicity. Complications are bad.

3. Progressivity. People with less income should pay (proportionately) less. People with more income should pay (proportionately) more. Of course, there is a range. Too much or too little progressivity are both bad.

4. Social concerns should not be advanced through tax laws unless no other means of addressing them is available. That means no "endorsement of marriage", no "definition of family", no charitable contribution deductions, etc. None of this UNLESS the goal is beyond reach through any non-tax measure.

5. Universality. Every individual, family unit and legal entity that can be taxed should be taxed. Exceptions for minors, but not for corporations clustered together as conglomerates, etc.

To develop the needed $20 Trillion in needed tax revenue, I would tax all income (note: that's quite a bit more than is taxed now) at a 14% rate AND I would tax any gift or inheritance by any person OR entity if the amount of the gift or bequest (adding together all such gifts or bequests to the same recipient) exceeded $100,00.

The gift/death tax is the only social concern (avoiding/preventing undue concentrations of wealth) I feel can ONLY be addressed through a tax law.

The 14% would be waived for any person (human being) whose income falls below the federal poverty line. For persons with incomes above it but below $25,000 I would tax at a rate of 7% to 14%. The rest of us would pay 14% on all income from dollar one. (The existence of more than one tax bracket makes this a progressive tax, though not by much.)

Entities would pay 14% on all income from dollar one.

Tax returns would be the size of postcards.

What say you?
 
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Flopper

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What would it look like?

Let's assume for discussion sake the following:

GDP (Gross Domestic Product) is $200 Trillion.

Government needs $20 Trillion annually, and will have no non-tax revenues.

Excise and other taxes can be changed by Congress and do not affect foreign trade, etc.

Any form of taxation is legal.
It would be a flat tax with provisions for tax credits for some that are in a low income bracket. There would be no deductions or exemptions!!. This might seem harsh but government manipulation of the tax system to encourage home ownership, investing, retirement savings, charitable giving, having children, going to college, and a million and one other worthy actions have created a system that encourages tax fraud and is a nightmare to understand or administer.
 

rightwinger

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If You Could Design a Tax System From Scratch.....

I get to deduct my stuff
You don't get to deduct your stuff

Just like the current system
 
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Madeline

Madeline

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What would it look like?

Let's assume for discussion sake the following:

GDP (Gross Domestic Product) is $200 Trillion.

Government needs $20 Trillion annually, and will have no non-tax revenues.

Excise and other taxes can be changed by Congress and do not affect foreign trade, etc.

Any form of taxation is legal.
It would be a flat tax with provisions for tax credits for some that are in a low income bracket. There would be no deductions or exemptions!!. This might seem harsh but government manipulation of the tax system to encourage home ownership, investing, retirement savings, charitable giving, having children, going to college, and a million and one other worthy actions have created a system that encourages tax fraud and is a nightmare to understand or administer.

Let's be clear then. In my version of Perfect Tax World, there are No other federal taxes. (State and local taxation is not on the table in this thread just for the sake of simplicity.)

No cigarette tax.
No fees for hunting/camping on federal land.
No fees for copies of federal documents requested under freedom of information, etc.
No fees for registration as a candidate for federal office.

Zip. Zero. Nada....not even any tax on imports.
 

Defiant1

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First the Federal budget gets slashed. Only programs provided for in the Constitution are allowed.

All others are regulated to the states and local municipalities.

Then the Federal cost is divided equally among every legal person.
 

rightwinger

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No Forms like this....

From Schedule M

Multiply line 1a by 6.2% (.062)

Enter $400 ($800 if married filing jointly)
Nontaxable combat pay included on
line 1a (see instructions)
Enter the smaller of line 2 or line 3 (unless you checked “Yes” on line 1a)
Enter the amount from Form 1040, line 38*, or Form 1040A, line 22
Enter $75,000 ($150,000 if married filing jointly)
Is the amount on line 5 more than the amount on line 6?
No. Skip line 8. Enter the amount from line 4 on line 9 below.
Yes. Subtract line 6 from line 5
Multiply line 7 by 2% (.02)
Subtract line 8 from line 4. If zero or less, enter -0-
 

Flopper

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I think the numbers in the assumption are way off.
The current GNP is around 14 trillion, not 200 trillion. GDP is about a trillion more
Also the government doesn't need 20 trillion a year. The current budget calls far a bit less than 4 trillion. I think these would be much better assumptions.

Google - public data
 
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Madeline

Madeline

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First the Federal budget gets slashed. Only programs provided for in the Constitution are allowed.

All others are regulated to the states and local municipalities.

Then the Federal cost is divided equally among every legal person.

What programs are provided for in the constitution?

Do you mean we'd have no FCC, no SEC, no FAA, etc.? Does that really seem workable to you?

 
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Madeline

Madeline

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I think the numbers in the assumption are way off.
The current GNP is around 14 trillion, not 200 trillion. GDP is about a trillion more
Also the government doesn't need 20 trillion a year. The current budget calls far a bit less than 4 trillion. I think these would be much better assumptions.

Google - public data


Feel free to use them, then. I'm still asking, what does Perfect Tax World look like to you?
 

The Rabbi

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Most of it looks good. Simplicity and universality are good.
Being progressive is not. I do not see why it is fair to punish people for being successful.
 

Patriot214

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A Flat Tax. Tax every working American 12.5% of their income. Apply this to individuals in all classes as well as businesses. If tax revenue to the government decreases, then cut federal spending. Let each state decide if they would like to have a state sales tax for infrastructure maintenance within their own state.
 
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Oddball

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The original: Duties, imposts and excises (i.e. fuel taxes to pay for roads and bridges). After that, gubmint spending limited to the areas whereby they are specifically empowered to act (Article 1, Section 8 enumerated powers).

No need for a national sales tax, "fair tax", income tax, VAT or any other direct tax that stifles productivity.
 

rightwinger

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First the Federal budget gets slashed. Only programs provided for in the Constitution are allowed.

All others are regulated to the states and local municipalities.

Then the Federal cost is divided equally among every legal person.

What programs are provided for in the constitution?

Do you mean we'd have no FCC, no SEC, no FAA, etc.? Does that really seem workable to you?


The Constitution mentions an Army and a Navy....but no Air Force

we can get rid of that....NASA too
 

Immanuel

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I'd go with the Flat Tax idea discussed earlier today with Madeline, but I would make certain items non-taxable such as things that people need to survive... i.e. milk and bread, cereal, baby formula etc. and maybe graded tax rates increasing the tax rate on "luxury" items.

I honestly don't like the flat tax idea.

It would be better than what we have now, but I think a flat tax would lead to a hell of a lot more people cheating by not declaring income... even more than we have today.

The question I would like to know is if there is anyone that would like to keep the system we have here today in the U.S.?

Who here just loves what we have now and wouldn't change it if they could?

Immie
 

Oddball

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The current Rube Goldberg of a tax code started out as a flat tax.

Turns out when gubmint has favors --in the guise of special tax breaks for this and that-- to sell, there is no shortage of people looking to buy them.
 
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Madeline

Madeline

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I'd go with the Flat Tax idea discussed earlier today with Madeline, but I would make certain items non-taxable such as things that people need to survive... i.e. milk and bread, cereal, baby formula etc. and maybe graded tax rates increasing the tax rate on "luxury" items.

I honestly don't like the flat tax idea.

It would be better than what we have now, but I think a flat tax would lead to a hell of a lot more people cheating by not declaring income... even more than we have today.

The question I would like to know is if there is anyone that would like to keep the system we have here today in the U.S.?

Who here just loves what we have now and wouldn't change it if they could?

Immie

I have tax lawyer friends. They love it.

Hey, everyone has to eat......
 
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Madeline

Madeline

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The current Rube Goldberg of a tax code started out as a flat tax.

Turns out when gubmint has favors --in the guise of special tax breaks for this and that-- to sell, there is no shortage of people looking to buy them.

Wrong, wrong wrong Dude. The federal income tax in the US has been progressive since it was first adopted.

Any tax on income with more than one bracket or even one deduction, exemption etc. is progressive.

 

Polk

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Most of it looks good. Simplicity and universality are good.
Being progressive is not. I do not see why it is fair to punish people for being successful.

It's not a matter of fairness as much as of practicality.
 

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