A self-titled modest proposal:

A Modest Tax Proposal from Average Joe

The guiding principles that must be the foundation of a new tax system:

  1. Everyone should be able to figure out everyone else’s taxes.  In other words, someone like me, who hates the American tax code to the core of my being, should be able to calculate what Bill Gates owes/paid.
  2. Any income category so defined by the Congress (I say only two are necessary:  Earned and Unearned Income) has a 0% tax rate for those under $X dollars of said category.
  3. The top rate gets first dibs on all future tax cuts.

A monument to Democratic machine political ineptitude is that they haven’t figured out that they can outflank the GOP on the right simply by performing one of those Capital-Steps PR events where, in this case, they just burn the Tax Code in effigy.  They should, while they’re at it, invite every Republican they can talk into being there.  They’ll get a few.

The U.S. Tax Code is a monument to every governmental principle our Founding Fathers tried to anticipate and circumvent; it is far longer than The Bible, and even harder to interpret precisely.  This is patently ridiculous, since ultimately we are simply exchanging cash for services.

So, here’s where we start on the new tax code.  Earned income is tax free for everyone up to $XX,000 (I say 36; $3K/month should provide for a decent set of choices on feeding, housing, and clothing your family).  The 16 year old burger-flipper and Bill Gates both get this $36K ($XXK; the concept is far more important than the numbers, which should be debated vigorously).

The next flat rate starts above $XXK and goes to $XXX,000 (I say $200K to start) and is say, 20% or, XX%, and is again applicable to everyone who is working for money.

Above $XXX,000, the rate starts (year 1) at a percentage required to equal the prior year’s tax revenue figure. 

This would sell because, if you’re poor, what’s not to like, and if you’re rich, you control American politics anyway so you suddenly have lots of incentive to make some wise and responsible budget decisions.  Even the Red State voters get this simple fact. 

If you have to keep the Social Security tax, give up on the cap, for God’s sake.  It’s the most regressive tax we have by a mile, since those with incomes unlikely to need SS are the ones who avoid lots of the taxes that fund it, year by year, as we go.  Insane.

Unearned income works the same way.  Allow Mr. 0% tax bracket to invest like Mr. Big does, and give him $X00 (say, $100/month) of his unearned income tax free.  This benefits everyone, since now Mr. Poor has incentive to stimulate the economy by investing.

Again, trying to be simple and fair here, the next one up starts at X+1% (21% in this example–don’t we want more incentive to earn income than not earn income, collectively?) up to $XX,000.  Above that, it gets taxed at a rate that combines with the top bracket of the earned incomer to be revenue neutral to the prior year, or whatever amount Congress and the POTUS can compromise on, budget wise.

It should work the same way for business.  Define small, medium and large businesses by number of employees (my preference) or gross revenue—again, completely and sensibly debatable—and give them their first X% of earned income, tax free.  Have two other brackets in which the tax remains flat in each earned and unearned income level, one for the medium sized company and the highest for the biggest companies, however (SIMPLY!) a big company is defined.  Once again, if there is budget room down the road, the biggest companies get the first break on the tax rate.

No other deductions.  It is the only fair way to do it.  Every special and powerful interest group must hate it equally.

The speech on Capitol Hill should be read, probably, by Bill Clinton, though he and Hillary are slaves to the Code anyway, so it would never happen, but if it did, it should start as the Code catches fire, and it should go like this: 

“Ladies and gentlemen, fellow citizens, we are here today to mark a historic event in American politics.?

“Our current tax code, the one burning before you, is the Mount Rushmore of American special interest politics.  You could spend you’re whole life trying to figure it out, and you would never finish your task.?

“There is not one person in this country that doesn’t on some level understand that this monstrosity is most beneficial to the most privileged in our society, since they are the only ones who can afford to pay someone else to take advantage of it.?

“Also, they are the ones who have written it.?

“The Democratic Party is going to fight for a tax code that is less than 20 pages long, that anyone with a high-school education can understand, provides confidence and hope for a better future to everyone, and that favors NO ONE.?

“We want to restore faith in our political system, and we believe this first step will go a long way towards doing so.  There is no Enron, no World Com, no Arthur Anderson, no corporate scandal rooted in the complexity of the tax code if we join together to build one that is sane.?

I would let Bill take it from there.

It will never happen.  It’s a big reason so few of us vote.