It's time for Democratics to seize the initiative on taxes. Let's propose a grand overhaul of the personal income tax system that results in
lower and
simpler taxes for the majority of Americans. Let's call the Republican bluff.
- Flat tax: GOP loves flat taxes. Let's give them a flat tax on everything: earned income, dividends, capital gains, inheritances.
- Fund SS and Medicare from general revenues: For decades both parties have used Social Security and Medicare surpluses to offset the deficit in actual government spending. So let's quit the pretense that they're separate, and fund those programs through general revenues. Guess which voters -- and how many -- are going to love this?
- Realistic deductions: $12,000 a year per person. A family of 4 making $48,000 would pay no tax or FICA; a family of 4 making $1,000,000 would pay taxes on $952,000. Guess which voters -- and how many -- are going to love this?
- No itemized deductions: OK, we'll have to phase out the mortgage deduction, but there are no other individual deductions which impact large percentages of taxpayers. How many people actually earn enough money to use them? Rethugs claim that deductions are a forced way to implement social policies, so let's stop the forced implementation of deductions for the wealthy.
- Tax rate: The tax rate is calculated by dividing the revenue required from income taxes by taxable income.
Imagine a nice tax calculator on the web. Enter your income, compare result with your current pay tax and FICA liability. That $48,000 family of 4 currently pays more than $3,000 in FICA before taxes; under this plan, they would pay nothing. How many votes would that be worth?
Imagine reducing the personal tax code from tens of thousands of pages to a few pages. IRS collection can focus on collection, not arguing the intricacies of various deductions.
When new programs are introduced in Congress, each taxpower can understand exactly how that impacts their personal taxes. For example, what does that $87 billion for Iraq cost you?
Tax cuts for the average taxpayer.