Creating Fair Taxation

This is something that I really feel strongly about. You can subsidize living expenses through redistribution; or you can just pay what a consumer of your product, that keeps you in business, would pay for your goods or services. Why would a single family home (household), with one income, not be able to meet this implicit contract? It's because the issuers of income, the employers, are not long term entities. They are a quarterly and bottom line entity. We are limited by our lifespans, and capital reflects this.

The "nuclear family" is financially destroyed. Maybe by the destruction of young age marriage, but that seems easily solvable to me, make it a part of national identity and give considerable monetary benefits to the married. Instead we give it to the child rearing (guardians of children), which by our family law, considerably tilts an incentive to unmarried women.

 

You're missing the point. Who are you to tell someone else what to do with their own money? You're arbitrarily allotting people X amount based on your subjective definition of "enough." And what grants you the authority to do this? Why, your belief that you know best, of course. The same trite busybody authoritarian attitude practiced endlessly by progressives who love to dish it out but cannot stand it when other people do it back to them.

 

The pursuit of status through wealth acquisition SHOULD be challenged. Especially if it cannot be challenged by the vast majority without wealth. It's not arbitrary, it's a matter of influence. Those with more wealth (influence) are the squeaky wheel...and the squeaky wheel gets the grease. That is where the authority comes into play. The only logical reason why someone would tell someone else what to do with their own money is because those someones with money are telling the decision makers what to do on behalf of their money. Or not, I'm just riffing here. <<< That sentence is your opt out clause to do an Ayn Randian dismissal of any other coherent argument.

 

Yes, it is certainly about fairness.

Yes, it is about social engineering as it increases the household wealth of workers that create the wealth based upon their labor dramatically reducing wealth redistribution.

Yes, it is about populism that protects the rights of the worker that are violated by the power elite.

These are all things we should be concerned about. We should care about fairness, we should embrace a worker being able to benefit from the wealth they create, and we should be concerned with protecting the person from the abuses of the power elite.

Contrary to you last statement both my federal tax proposal (income tax) and my state tax proposal (sales/consumption tax) fully fund the expendatures of the federal and state government.

Once again I'll point out that this is a "compromise" tax proposal where minimal concessions must be made by conservatives, liberals, and libertarians but the benefits for each far outweigh any ideological compromise.

For the conservative it reduces the size of the federal government by roughly 1/3rd with the privatization of Social Security and the elimination of Medicare (Medicaid remains as a safety net). It also dramatically reduces wealth redistribution through tax and spend welfare programs as it builds the wealth of the poor based upon their labor reducing the necessity for welfare assistance.

For the liberal it provides a superior program to ensure that the "retirees" will have far more wealth and income with a far superior safety net through privatization of Social Security. It also provides more disposable income for the poor ensuring that they will be far better off than they are today also based upon their labor that is untaxed. It virtually eliminates the regressive nature of taxation that adversely affects the poor and lower middle class by establishing a superior form of progressive taxation without arbitrary progressive tax rates..

For the libertarian it fully funds government, provides fair taxation for all, eliminates crony capitalism in our tax codes, and protects the rights of the workers.

For the nation it increases the wealth accumulation of the people, increases economic activity, increases the GDP, and reduces income inequities based upon the labor of the workers that produce the wealth of the nation.

Is it perfect? No it's not but it's the best I could come up with based upon many suggestions from conservatives, liberals, and libertarians over many years of discussion. I always welcome postive suggestions on how to make it a better proposal but often we must endure the "nay-sayers" that have nothing better to offer.

 

There are many arguments related to the minimum wage that this thread on taxation to fund the expenditures of government simply can't address. It is a different argument where we would really need to discuss the "natural right of property" (i.e. the right to "support and comfort" based upon the labor of the person) if we were to address it properly but that would take us far afield from this discussion on taxation to fund government.

What is relevant to this thread and the tax proposals is that by eliminating the federal and state tax obligations for the bottom 50% of income earners it reduces the "minimum wage" requirements because it eliminates the "tax expenditure" from the necessary spending of lower income households. The minimum necessary income includes all necessary expenditures and "taxation" is currently one of those expenditures that I seek to eliminate for low to mid-income households. It made little sense to me to tax the poor person and then provide welfare assistance to them to replace the taxation.

 

There is no limit on how much wealth can be passed from one generation to the next through inheritance. There were some liberals that did propose a cap on inheritance (e.g. the government should confiscate all of the wealth above a certain amount such as $50 million) but my proposal doesn't include any caps on wealth transfer.

I didn't even limit my proposal to inheritance but instead expanded it to address all very large single sources of income such as winning the lottery or the huge signing bonuses for some athletes that typically have a very short career in a sport. The "one-time" exemption can be used for any single large transfer of wealth from any source. My proposal is not an "anti-rich" tax proposal by any definition as there are no limitations on wealth transfer by inheritance or any other means.

Under my proposal Bill Gates' heirs are going to receive tens of billions of dollars in inheritance. I don't have a problem with that, do you? If I don't have a problem with a single inheritance greater than the annual budget of some countries how could anyone claim I'm anti-rich in my proposal.

 

My proposal doesn't challenge the "pursuit of status through wealth acquisition."

My proposals merely impose fair taxation.

I'm not opposed to anyone becoming wealthy and my proposal actually increases the wealth accumulation of the American people both during their lifetime and, perhaps more importantly, the generational wealth of the American people.

 

Since it is totally subjective, it will be completely open to manipulation for good and bad purposes. And it is complicated, which further opens it up to abuse. And it is geared to social goals, which means it absolutely will be corrupt.

You do not consider that politicians (power corrupts, and people want power) will abuse the system for their own gain.

You sort of privatize social security, but it will not last because you leave the govt in control of part of it. Retirement is too big a pot of money, and to useful for social engineering, to be left alone by the politicians. With the first drop in the stock market, the pols will want to "help" since the market is too complicated for average people (they already make that argument). Remember, your goal is social engineering and populism, you have built in the framework of corruption.

The only way to cut the corruption and abuse down is to define the specific duties of the govt, and then create the tax rates to pay for those duties, and make the tax system incredibly simple and transparent so abuse is hard to hide.

 

I think your idea is interesting. Even if the $50k threshold seems arbitrary, the idea still holds. I'd have to think for awhile about the implications and other tax adjustments to make it workable.

 

Money is a creature of the state and it serves the purposes of the state. The money you accumulate within a lifetime is subject to confiscation by the state at any time the state desires to take it for any reason they or we want. The reason we have inheritance taxes is to avoid turning into a class based society similar to Europe in previous eras. There are compelling national issues with controlling the amount of wealth passed from one generation to the next and while it may seem unfair to you, when you are dead your opinion will be immaterial to the discussion. The history of allowing wealth to be passed on is pretty clear and it is grim. I am for confiscating wealth at death beyond a certain amount, make it 1 million per heir. Everything over that amount should be liquidated and that wealth should return to the pool again for redistribution.

 

Like you I'm also very concerned with corruption by the politicians which is why I attempted to remove as much subjectivity as possible.

The median income is not subjective and that is the foundation for both the exemption for the federal income tax as well as the basis for determining the prebate level for the state sales (consumption) tax.

The income tax rate and the sales tax rate are not subjective because both are based upon the authorized expenditures. Basically if the authorized expenditures go up so does the tax rate and if the expenditures go down then so does the tax rate.

I've done as much as possible to remove any loopholes or exceptions at both the state or federal level.

None of the money for private investments is entrusted to the government - it's all managed through private investment firms like our current IRA's and 401K plans. The politicians can't get their grubby little hands on it and, excluding regulations to protect the investors from abusive investment firms, have no involvement at all. Short term fluxuations in investments do not affect long term outcomes for diversified and age-adjusted investment porfolios so they are not a consideration.

Only the "safety net" remains in the hands of the politicians and it's fully funded so there's no reason to reduce the proposed benefits that are literally based upon solid costs of living statistics so that retirees don't have to rely on supplemental welfare assistance when they become too old to work. It never made any sense to me that we have a social welfare program (Social Security) that required about half of the people to still rely on other welfare programs when they became too old to work. That's an inherent problem with Social Security today and certainly recent Congressional proposals to address the funding problems by reducing benefits (e.g. the change in the COLA formula that reduces necessary benefits for retirees) only makes the "additional welfare" problem worse.

The biggest problem with my proposal isn't the actual tax proposal. It's inflation because we're not effectively on the gold standard that prevents the artifical inflation of the money supply. I believe you mentioned that as a concern of yours before and I agree with you completely on that problem. Inflation steals the labor of the person stored in dollars because they lose purchasing power based upon their labor over time. Inflation benefits the banks and the government by stealing the labor of the worker over time. I don't address inflation in this thread because it's limited to taxation.

Once again, given your concerns, that I also have, what suggestions do you have to make my proposal better. As noted I've tried to remove subjectivity to the best of my ability and tried to make any attempts to corrupt the system so obvious that the politicians won't be able to get away with it.

 

The $50,000 exemption (for a family of four) is not arbitrary. It's based upon the median income and based upon the fundamental argument that there those that can afford to be taxed and those that can't. I merely drew the line right down the middle when it comes to income. Because of the exemption it also creates a very progressive tax system based upon a flat tax rate above the exemption level.

We already know, based upon tax return information from the IRS, that 47% of households have a zero or negative income tax liability based upon tax credits and deduction both of which are eliminated by my proposal and replaced by the exemption. Yes, I've bumped that up to 50% of households but it also removed the "negative" income tax liabilities by eliminating tax credits.

Bottom line is that the 50% median income was not an arbitrary amount but instead was based upon current income tax data.

 

There are numerous flaws with this opinion.

First and foremost is that "money" (not unredeemable promissory notes) is nothing more than a common commodity generally to expedite the barter system. Lawful money in the United States is "coined" gold, silver, and pure copper (plus recently added platinum) coins that have have intrinsic value as useful metals. A coin is nothing more than a certified token with a specified metal content and a "lawful legal tender coin" is one used in trade based upon statutory requirements. All American Eagle gold, silver and platinum coins produced by the US Mint are "legal tender lawful money" in the United State while Federal Reserve (promissory) notes are merely "legal tender" and not "lawful money" in the United States. A Federal Reserve note "promises" redemption in money but the laws for redemption are not enforced. On the other hand a Canadian Gold Maple Leaf is lawful money in Canada but it is not "legal tender" the United States although it's still "certified money" because of the gold content. Of note a Canadian Gold Maple Leaf can be used as money in the United States but it's not "legal tender" in the United States and there isn't a statutory (legal tender) requirement for anyone to accept it if they don't want to.

The "poor" do not have any "right of property" to the wealth created and accumulated by others. The proposal to confiscate wealth at a person's death to redistribute to others is nothing short of advocacy for theft. An inheritance tax should not be about theft but instead about taxing the income to the person that receives the inheritance just like others in society are taxed related to income. The only special consideration is that it's a single lump sum as opposed to a long term form of income (just like a Powerball jackpot).

In the past there were legimate arguments for excessive inheritance taxes because very wealthy individuals that acquired their wealth through investments were the beneficiaries of "crony capitalism" where they were subjected to much lower tax rates than the average person overall. My proposal eliminates crony capitalism so all that's left is the taxation of the income on a one-time large lump sum income to the heir (or Powerball winner). Elimination of crony capitalism removes the historical problems with wealth being handed down from generation to generation.

We can note that $1 million isn't very much money. It's barely enough to retire on at a median income level today. There are also numerous problems with determining "estate value" as not everything is really measurable in dollars and cents. Of course for many, such as the family farmer, requiring the selling of the property so a tax can be paid is very detrimintal to our economy unless you advocate that all production from the land is controlled by corporations as opposed to individuals. I'd oppose that idea.

The key to this issue for me is the elimination of 'ill-gotten gain' because of crony capitalism as that's the historical problem you should really be concerned about.

On a final note we can also project that if all of the wealth was redistributed today within just a few years the poor would be poor again and the wealthy would be wealthy again. As the history of lottery winners demonstrates most poor people are incapable of maintaining wealth when they obtain it. Redistribution of wealth does not, in the end, lead to wealth equality. The person really needs to create their own wealth because if they don't the redistribution simply results in squandering of the wealth.

 

All of your selections are subjective. Median is quantitative, but your selection of median as the cutoff is subjective and is based on your view of "fair". Everyone has a different idea of what is "fair", its a big reason why the current system is so messed up.

On Social Security, govt is still involved - they still collect the tax and deposit it in "private investment portfolios that are highly diversified and age-adjusted" meaning portfolios the govt approves. You really think the govt isn't going to be all over that "private portfolio"? You don't think they will require a large part to fund govt debt, just like they have been saying they want to do?

I told you my proposal, a simple one rate for all, all income from employers and legal entities taxed at the same rate. No discounts, coupons, credits, box tops, deductions. The rate is set based on what the govt needs to fund its tasks. Everyone has skin in the game, everyone pays a price for the govt, no more playing favorites and no more political social engineering. At worst, 3 tax rates.

And yes it will be abused, politicians will slowly corrupt the system, but it will take far longer to corrupt than your complicated system. The more rules, the more opportunity for corruption.

 

Incorrect. Money does not replace a barter system at all, it never has and never will. Money is a form of debt. If you want to read about the history of money, try this book "Debt, the first 5000 years".

[/QUOTE] Lawful money in the United States is "coined" gold, silver, and pure copper (plus recently added platinum) coins that have have intrinsic value as useful metals. A coin is nothing more than a certified token with a specified metal content and a "lawful legal tender coin" is one used in trade based upon statutory requirements. All American Eagle gold, silver and platinum coins produced by the US Mint are "legal tender lawful money" in the United State while Federal Reserve (promissory) notes are merely "legal tender" and not "lawful money" in the United States. A Federal Reserve note "promises" redemption in money but the laws for redemption are not enforced. On the other hand a Canadian Gold Maple Leaf is lawful money in Canada but it is not "legal tender" the United States although it's still "certified money" because of the gold content. Of note a Canadian Gold Maple Leaf can be used as money in the United States but it's not "legal tender" in the United States and there isn't a statutory (legal tender) requirement for anyone to accept it if they don't want to.

[/QUOTE]

This is wrong. Money is not redeemable for gold, silver or precious metals at all. I have no idea where you got these ideas but strongly suspect it was on the Mizes Institute website or a Ron Paul blog. The entire world works via a fiat money system with floating exchange rates and is not pegged to a commodity or a single currency such as the dollar. This went out the door in 1971 when Nixon took us off the gold standard for good.


[/QUOTE]The "poor" do not have any "right of property" to the wealth created and accumulated by others. The proposal to confiscate wealth at a person's death to redistribute to others is nothing short of advocacy for theft. An inheritance tax should not be about theft but instead about taxing the income to the person that receives the inheritance just like others in society are taxed related to income. The only special consideration is that it's a single lump sum as opposed to a long term form of income (just like a Powerball jackpot).

[/QUOTE]

If the "poor" are just a couple people and the gentry are 98% of the people then they have no power at all. Unfortunately for your point of view, the poor are now a large minority and the middle class is fast becoming part of the same group if you look at net worth and inequality of incomes. We are on a trajectory that is incredibly dangerous and it is not going to change with free market remedies. In the past, we have practiced income and wealth distribution and that created the largest middle class in the world. We did that through the government, labor unions and the participation of the poor and middle class at the ballot instead of in the streets. If you want to avoid a bloodbath for your children, go back to what works and that is income redistribution from those who win to those who lose. I am sorry you don't like it but that is the way all modern societies manage the outcomes of a capitalist economic model. We are running a monopoly game that must never end, it must keep going forever and ever or the only outcome is revolution.

[/QUOTE] In the past there were legimate arguments for excessive inheritance taxes because very wealthy individuals that acquired their wealth through investments were the beneficiaries of "crony capitalism" where they were subjected to much lower tax rates than the average person overall. My proposal eliminates crony capitalism so all that's left is the taxation of the income on a one-time large lump sum income to the heir (or Powerball winner). Elimination of crony capitalism removes the historical problems with wealth being handed down from generation to generation.

[/QUOTE]

Perhaps. You still have the power of money itself because if you have more money than you can possible spend, you are likely to use it against the interests of the majority which is exactly what is going on right now through Citizens United.


[/QUOTE] We can note that $1 million isn't very much money. It's barely enough to retire on at a median income level today.[/QUOTE]

An heir is not entitled to a life of ease because of the work done by someone else. They have no right to that money at all except as we deem it.

[/QUOTE] There are also numerous problems with determining "estate value" as not everything is really measurable in dollars and cents. Of course for many, such as the family farmer, requiring the selling of the property so a tax can be paid is very detrimintal to our economy unless you advocate that all production from the land is controlled by corporations as opposed to individuals. I'd oppose that idea. [/QUOTE]

There are very few family farms anymore and most of them are not worth much anyway so this is a strawman. The law can be structured to keep going concerns alive if the heirs actively work in the business or farm. Most people with situations like this take out huge life insurance policies to pay the tax. That is fine with me.

[/QUOTE]The key to this issue for me is the elimination of 'ill-gotten gain' because of crony capitalism as that's the historical problem you should really be concerned about.[/QUOTE]

Agreed.

[/QUOTE]On a final note we can also project that if all of the wealth was redistributed today within just a few years the poor would be poor again and the wealthy would be wealthy again. As the history of lottery winners demonstrates most poor people are incapable of maintaining wealth when they obtain it. Redistribution of wealth does not, in the end, lead to wealth equality. The person really needs to create their own wealth because if they don't the redistribution simply results in squandering of the wealth.[/QUOTE]

Actually, the world has seen the destruction of wealth via revolution or proscription many times in the past. Yes, the wealthy will rise yet again in a vicious cycle which is why you must tax wealth at creation and upon death. It is the only peaceful way to avoid what Pinketty found to be an age old problem, massive concentration of wealth that never really gets spent and creates a class based society.

 

A quantitative value is not a subjective value. The selection of "median income" which I explained in a prior post is based upon our current tax codes where deductions and tax credits result in the botton 47% of taxabe household having a zero or "negative" (i.e. receive more than they paid in) tax liability. Because all deductions and tax credits are removed there will be no more "negative" income tax households and it was logical to simply draw that quantitative line at 50% because we don't calculate the 47% percent household income level and never have. If there is any subjectivity then it's limited to just a couple of percentage points based upon our existing data.

No, the money for the private investment accounts will not be funneled through the US government for exactly the reason you cite. It will go directly from the employer to the investment company selected by the employee identical to 401K and IRA retirement accounts.

As I also mentioned in a previous post one of the most illogical things we do is tax a person and then send them money to replace the money we took in taxes. All that does is increase the welfare state and that's what you're proposing. I'm for small government, not large government, and not taxing people so that the government doesn't have to send them a welfare check is one means of reducing the size of government.

My exemption from income taxation and the prebate on the sales (consumption) tax eliminates a significant amount of welfare assistance thereby reducing the size of the welfare state.

As noted with the income tax there is a single national tax rate based upon the revenue requirements established by authorized spending. The sales (consumption) tax will vary by state because each state has different financial needs for the government.

Multiple tax rates are the worst form of crony capitalism and the most manipulated by politicians. That's why I oppose them and instead allow the authorized expenditures to determine the tax rate and not the politicians.

Any proposed changes to the tax code or to spending would be apparent to every American as all of these are readily identifiable. The tax system is so simply that any change is evident immediately. Only uncomplicated public disclosure, which my proposal allows to happen through the press, will prevent the politicans from corrupting the system. While any system can be corrupted by the politicians my proposal makes in impossible for the politicians to corrupt the tax system without it being spread all over the news media in simple and understandable terms that everyone will comprehend.

 

This is off topic so I'll make just this one last post on it.

I never stated that money replaced the barter system. I stated it expedited (facilitated) the barter system.

I'm not referring to international trade but instead to domestic trade. Nixon removed the US from the Bretton Woods international trade agreement.

https://www.law.cornell.edu/uscode/text/12/411

We only have species coins (lawful money) and currency (promissory note) that are legal tender in the United States. The problem is that this statutory law is not being enforced by the US government and we cannot redeem Federal Reserve notes in "lawful money" on demand.

The concerns you address are of such a scope that they cannot be addressed by the tax codes. They deal with the laws of property. I have, to a limited degree, addressed this in my summary as there I address the direction we must go in addressing issues of gross inequities.

Yes, with money comes power but the tax codes cannot fix all ills nor did Citizens United, a freedom of speech issue that allowed corporations to spend on political compaigns, have anything to do with inheritance taxes (corporations don't pay inheritance taxes).

"Except as we deem it" - Where did you come up with that self-rightous false belief? Now you might argue with the amount my one-time exemption for a large sum income in a single year from any source but there is no legitmate argument that the income to the person should be taxed at a different rate than any other income. Such a proposition would arguably violate the equal protection clause of the Constitution (which is a problem I see with our current tax codes).

No loopholes, no exceptions. I've stated that before and it also applies here. All you're doing is re-introducing corruption into the tax codes that I've worked so hard to eliminate.

No, the only way to prevent this vicious cycle is to allow those that create the wealth with their labor (i.e. the workers) to retain enough of the wealth they create to provide for their "support and comfort" (John Locke - Second Treatise of Civil Government, Chapter 5, "Natural Right of Property") which is a key component of my tax proposal.

http://www.constitution.org/jl/2ndtr05.htm

I appreciate your thoughts on the economic ills of society but they go far beyond what a fair tax code that funds government can address. They are akin to the beauty queen citing world peace as her goal in life. It is a worthy goal but not a pragmatic goal to obtain with a single stroke of the pen. The goals you seek to achieve must be based upon the wealth the person creates with their own labor based upon their natural right of property and cannot be based upon taking the wealth from another person that they have no right to.

 

Apparently you wish to live in a fantasy world created out of your desire to see wealth, money and power as a right of the individual completely divorced from the state. They are inseparable. Taxation is a tool by which the state can take money out of the system to further the goals of the state. It is an economic solution to problems the state encounters and has been a vital means of controlling the accumulation of wealth, the distribution of wealth and the management of sectors of the economy. There is no mandate or need for the state to tax anyone to spend money it can create with a wave of the hand. The reason the state taxes you is for force one currency to become the defacto standard of paying debts either privately or publicly. When the state taxes us, it does so in order to fulfill a political agenda and an economic policy agenda that attempts to implement the wishes of the people who voted the officials into office, nothing more. Your claim that once the state issues currency it now belongs solely to the person holding it is preposterous. That has never been the case throughout all history. The state has always had the power to confiscate money via taxation, duties, regulations and so on. It was not that long ago that the state took 90% of every marginal dollar earned past a certain amount. The state allowed loopholes to give some a way out of paying those taxes but they could have closed them and enforced a scorched earth policy at any time. We have done that in national crisis many, many times to the point where we had the state run most of the economy, ie. WW1 and WW2. Nixon had wage and price controls for goodness sake. Your posts reflect a bizarre reading of history and a complete disregard for the nature of a fiat currency. Taxation aims to further goals of the state. Before you go any further, perhaps the best response would be to list the goals your advice would further and then to justify those policy goals. That is the core of any tax policy. Other than the vague notion of fairness which you fail to define, what does your advice do for the nation and why is this a good thing?

 

No, a quantitative value is either objective or subjective based on how it was selected. You select median for income tax and $8M for inheritance tax based on fairness, fairness is completely subjective. In this same thread another person thinks $8M is too high and $1M is fair.

And complexity is the door to corruption, and your plan is complex. Every rule, every threshold, every place the govt has a role, will be expanded corruptly. Simple may not be completely fair, but it will be honest. This concern about fairness is why the tax code is such a disaster.

 

The primary purpose of our government, as established by the Declaration of Independences, is the protections of the rights of the person and the "right of property" is one of those rights. Unfortunately our laws of property are not fundamentally based upon the "right of property" but instead are based upon "statutory title to property" and that is the overlying issue that you fail to address.

The only legitimate purpose of taxation is to fund the authorized expenditures of government. In securing funding the government must infringe upon the right of property but in doing so it must treat all individuals the same. We don't have that today and that is all I address when it comes to "fairness" in taxation. My exemption, while seen a social engineering by some, is actually based upon the "right of property" were the person is entitled to the "support and comfort" of their household based upon their physical labor.

Perhaps in a very limited sense it social engineering because I allow the identical exemption for those that don't earn income from their labor but instead earns it through investment but I've proposed this because it treats all individuals the same regardless of the source of their income.

Once agian the tax codes cannot address the greater issue without becoming corrupted by the politicians. I appreciate your concerns but your proposals introduce the same corruption into the tax codes that we have today.

But there is a more pragmatic issue at hand. The tax proposal must be acceptable to both Republicans and Democrats equally or we're just blowing smoke up our own ass. My proposal accomplishes several of the primary goals expressed by both Democrats and Republicans.

For Democrats it dramatically reduces poverty in America based upon wealth accumulation by the workers.
For Republicans the reduction in poverty reduces the necessity for the welfare state to mitigate the effects of poverty.

It's really a win-win proposal for both Democrats and Republicans because it addresses the problem of "poverty" directly based upon the "natural right of property" where the person provides for their own "support and comfort" with their labor.

 

Once again the "median income" was not selected arbitarily but instead because that's where the current break between who pays income tax and who doesn't currently exists according to the tax data. It is based upon the actual tax laws created by Congress that currently exist but instead of it being very confusing because of deductions and tax credits it was merely simplified into a single exemption from taxation for all Americans. It is a trade-off between "deductions and tax credits" that are highly complex to calculate and a single "exemption" that is determined by household size. No special forms, no Schedule A's, no calculations of tax credits, no difference between the home owner and the renter, no more BS in the tax code.

It will not require H&R Block or Turbotax for a person to file their personal tax return because it's simple and straight forward.

Yes, the $8 million one-time exemption for a large income from any source is "subjective" but the foundation for it was not. Anyone receiving such a large income, be it from inheritance, a lottery, or signing bonus, is instantly in the top 1% of all income households and the $8 million exemption was based upon them remaining in the top 1% in the future based upon a guaranteed return on investment. Above that amount the income is taxed identically to all other income.

There are a couple of other logical ways of determining the exemption for a single once in a lifetime large income that I explored.

We could take the annual exemption and multiply it by the estimated 45 year working career of the person (i.e. $50,000 x 45 years) and the resulting exemption would be $2,250,000 as opposed to $8 million and then tax the balance at the annual tax rate for the year the income is obtained.

Or we could simply provide no exemption and tax all of the large single income source at the income tax rate in effect for the year the income is derived.

In the end I settled on the $8 million exemption because of a consensus between liberals and conservatives that I have had extensive conversations with. Conservatives didn't like any tax while liberals wanted no exemption at all so it was a political compromise so that a proposal could be made. Both tended to agreed that the exemption should apply to not just inheritance but to any large single year income from any source.

Of course you can also make a proposal but it must be acceptable to both liberals and conservatives or it has no chance of ever becoming law.

The only real difference between your proposal for a flat tax rate and mine is the exemption that replaces the current deductions and tax credits. As noted mine is more logical because instead of taxing a person and then providing welfare assistance to mitigate the poverty created by the tax burden I simply don't create that tax burden.

Your flat rate tax proposal increases the welfare state because it doesn't exclude the poor from taxation while my flat rate tax proposal decreases the size of the welfare state because of the exemption up to the median income amount. You create a larger government with more spending obligations while I create a smaller government with fewer spending obligations.

There is one final other fundamental difference between your proposal and mine. My proposal actually has implied bi-partisan support based upon many Democrats and Republicans that have made statements on revision to our tax codes while your proposal for a single tax rate for all Americans without any deductions, tax credits, or exemptions has basically been rejected by both political parties. In short at least my proposal would have some probability of passage while your proposal would never pass in Congress.

The final word on simplicity: Because of the simplicity of my tax proposal everyone would basically be using a slightly modified 1040EZ tax form for their personal income taxes and every enterprise would be using a slightly modified Schedule C for business. Two simple forms to address all federal income taxes. It can't be any more simple from my perspective. If you think my proposal is complex then go to the IRS website and just search all of the forms and publication listed.

http://www.irs.gov/Forms-&-Pubs

 

Well now you are totally done for - your justification for selecting median is the current tax code, the same code that is totally broken and a complete disaster.

Median is a bad rate anyway, its the tipping point to the tyranny of the majority problem.

 

No, my tax proposal is not based upon the current tax code. It's based upon a quantitative result of the current tax code. There were legitimate reasons behind the tax deductions and tax credits that were argued before Congress. The problem is that in creating the deductions and tax credits the politicians introduced corruption. My goal in creating the exemption is to eliminate the corruption of the deductions and tax credits in a manner that cannot be easily corrupted by Congress and certainly can't be corrupted without the American people knowing about it in advance.

The "Exemption" is an offset of the "Deductions/Tax Credits" that did have a legitmate foundation but were corrupted by the politicians. Nothing more and nothing less.

We don't live in a "Democracy" where the tyranny of the majority is a problem. We live in a Constitutional Republic. We don't need to worry about the People of America imposing the tyranny of the majority upon us under federal law. The people don't vote on federal laws. We need to worry about Congress imposing the tyranny of a very small minority upon us.

Only 23% of Americans are Republicans, 30% are Democrats, and 40% are Independents. Any law that is based exclusively upon a Republican, Democratic, or Independent agenda is the imposition of law by a minority. Only with bipartisanship where Republicans, Democrats and Independents come together to support a law is the law not the imposition of tyranny by a minority.

 

Lets leave fairy land now. Most people vote their self-interest, they can be bought. Once more than 50% of voters are dependent upon the govt handout, then they will vote for the party that gives them the handout, and that party will always win. When a majority doe not feel the cost of the programs, then they will vote themselves benefits.

But that assumes votes matter. They don't. obama openly disregards the law, he ignores the Texas judge who put a hold on the executive amnesty, he says he will ignore the result of King v Burwell if it doesn't go his way, he has already spent money not authorized anywhere by Congress, he wants to start his own tax program. We don't live in a democracy or republic any longer.

 

Very cynical and factually inaccurate on all counts and I will not address it because it has nothing to do with my tax proposal.