[internetworkers] Tax reform
dianaduncan at contentdb.net
Wed Feb 23 11:15:15 EST 2005
I couldn't sleep last night, so I was thinking about how the current
tax code "rewards" and "penalizes" strange things. For instance,
everyone seems to think the ability to deduct mortgage interest
encourages home ownership. I believe it really encourages LOAN
ownership, and actually discourages people from paying off their
mortgages. I think that the government shouldn't be doing this type of
thing via a tax code.
One of the big things I was considering was how we can encourage
corporations to provide good jobs here in America. These were my ideas
(caveat: I am not an economist, nor a tax policy wonk, just a concerned
citizen with insomnia. Feel free to poke holes, I'm sure there are
1) Get rid of ALL deductions, credits, etc. for personal taxes. No
more marriage penalty/benefit, no more child credit, no more anything.
2) Get rid of filing for personal taxes, except for exceptional
situations such as multiple jobs, where the citizen would be due a
refund (see below).
3) Enact a SIMPLE, progressive tax on wage income, where the first x
dollars are taxed at 0%, the next x dollars taxed at y%, the next at
z%, etc. Require the payer of the wage to do all the
4) Tax all other income at one flat rate, and require the payer of the
dividends, interest, etc. to withhold and file. If we really, really
want to encourage home ownership, don't tax capital gains on primary
residences at all.
5) Get rid of any type of joint filing. Each taxpayer would be treated
individually. How many children you have is your lookout.
OK, now for the encouragement to corporations:
1) Any company deriving income in the US must file, and must pay x% of
the profit derived here in taxes.
2) The company may reduce their tax burden by the amount of wage income
taxes their employees in the US are paying.
3) Severely limit the types of things that can be expensed, especially
as regards to "perks" to already high-payed executives. Besides, those
types of perks would be less attractive to the company, as the
employees would not be paying income tax on these, and that's what the
company can reduce their tax burden with.
Many company's would end up owing no tax, and many of the incentives
they currently have to move jobs overseas (especially to produce work
product that is then consumed back in the US) would be offset by the
tax benefit of having US employees.
I can definitely see that this would put a lot of tax accountants out
of work, as pretty much all loopholes would close. Sorry to them :).
This type of tax code also requires that the US step up and GUARANTEE
that our citizens (especially our children) will not be hungry,
homeless, uneducated or without medical care. I do think that's within
the purview of the federal government, to provide for the basic welfare
of all citizens. Anyway, the more employment we have, the higher the
tax base, the more we can do for people to help them get the more jobs,
etc. If jobs keep leaving the US, how long do you think we can be the
consumers we are?
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