Radically changing our tax system into a hybrid of sales taxes and taxes on wages can benefit all as well as boost our savings rate in this country.
Call it a five, ten, fifteen plan, or 5, 5, 5, or not. That may well be for other policy wonks to come up with a good name. The plan is to eliminate taxes for those with incomes under $20,000 a year. Next, have a 5% tax rate on those making between $20,000 and $500,00. The next bracket would be 10% on those with income running from $500,000 to $5,000,000. Those over $5,000,000 would pay a flat rate of 15%. No deductions for anything, mortgage interest, kiddies, charitable donations, nada, rien, zip.
With lower tax rates, people should have more money to donate charitable donations should increase their giving.
Then top it off with a 5% national sales tax. The sales tax would generate a whole lot of money from people that get paid in cash, under the table, or even ill gotten monies that people end up spending anyway(if pot is a multi million dollar cash crop, how else to get some of that cash).
The benefit would be lowering taxes on the working poor. No income tax for them, granted they would pay a higher % of their living cost in taxes in the form of a sales tax, but with the extra money they would receive on their paychecks, it should balance out. Then for the other large group of people making $20K to $500K, a 5% flat tax would be simple to follow, lower the non compliance and cheating, and make it super easy to file taxes. Those making $500k to $5 million have all the accounts and tax lawyers to lower their taxes, how about a simple 10% tax. This is a great reduction in their rate, but again would most likely raise revenues in the ease and simplicity, sorry to all the tax preparers and software manufacturers of tax preparation software. Obviously those people that are making over $5 million can easily pay %15, and some may actually pay more than they are now.
With the modified flat tax, hybrid system, or whatever you want to call it should simplify all taxes, make them easier to collect, and be fairer to all.
I think this also could work with dividend/investment income. Republicrats always talk about how we can't scare away investors and need to reward them, well lets have have them pay less taxes the longer they invest. Maybe day traders get taxed the most on their income. Tax the investments on a 1, 3, 5, 10, 15, 20, year increments. If people are really buy stocks to invest for the long haul, lower the taxes as the investments age.
What do you think?