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Okay so this is my first post at Kos. This was originally posted over at Borgger, but I thought I'd get Kossacks opinions as well, as I know you have lots to add! It's a creative commons zero license so feel free to repost/quote as much as you would like. If anybody has anything to add, please add a revision to the Borgger thread.

The Proposal: A Comprehensive, Fair, Flexible & Simple Income Tax

Regardless of debates about how much revenue Government should be raising, we all agree that everyone should pay his or her fair share.  In many ways, the current structure does not provide this.  So, I propose a new income tax system with the following features: Comprehensive Coverage, No Loopholes, Individual Assessment, Poverty as Lower Bound, Linear Rate Progression, Maximum Average Rate and Normalized Rate Function.

And this is why the system is so simple.  Literally all that a taxpayer needs to report is one number – total income.  The IRS could then look at the income distribution, figure out which percentile the taxpayer’s income is, and compute the individual’s average tax rate.  The taxpayer then pays exactly his fair share – no tax preparer, no loopholes, no

distended tax brackets.  It’s comprehensive, fair, flexible, and simple.

Owing to the complexity of the current system, it is very easy to hide income, either in the loopholes or overseas.  There is a great article in the Economist if you are looking for more information on this.  It is estimated that the IRS loses over $300 billion in revenue annually.  The comprehensiveness of my proposal would make it much easier to audit fraudulent taxpayers.

From the Economist article I referred to earlier: in 2006, the top 400 taxpayers earned an average income of more than $263 million.  They paid an average tax rate of 17.2% .  Thirty-one of them paid less than 10% in tax.  This is absurd.

The rest of the plan on Borgger.

Originally posted to midwestcoast on Sat Apr 18, 2009 at 06:24 PM PDT.

Poll

Does a progressive income tax rate make sense?

86%31 votes
2%1 votes
11%4 votes

| 36 votes | Vote | Results

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Comment Preferences

  •  Don't forget your tip jar (5+ / 0-)

    Then, remember a widow's mite is nothing to a rich man, and a foodless day to her. The devil is in the definition of taxable income.  

  •  Good general idea, but a few quibbles (8+ / 0-)

    Eliminating all deductions would create significant economic dislocations.  The mortgage tax deduction, if eliminated, would be a severe blow to the current weak real estate market.  Eliminating important deductions in stages, say over 20 years, would minimize these impacts.

    I like the idea of a continuously variable tax rate depending on income, but I'm not sure a linear increase is most equitable.  Something more parabolic, with higher rises at higher incomes, would probably meet the ideal of progressive taxation more closely.

    I think serious tax reform will probably have to wait until Obama's second term, politically.  The electoral consequences are apt to be unpredictable, so it makes sense to pursue it as the centerpiece of a post-reelection program.

    Godwin is dead. Glenn Beck killed him.

    by Dallasdoc on Sat Apr 18, 2009 at 06:36:14 PM PDT

  •  Um. How will this reveal income hidden overseas? (6+ / 0-)

    And yes, it ought to be much more than linear. Linear on a log scale, maybe. Eat the rich!!!

    And if you eliminate the tax code, you eliminate the power to enforce policy goals through taxation - "the power to tax is the power to destroy" - and I think we ought to be using that power much more vigorously. Say, taxing carbon emissions.

  •  I sure agree it should (0+ / 0-)

    be more simple.  Congress has given so many breaks to so many special groups/situations that the present system is unfathomable.  I would propose that until we change the tax code that Congress should convene sometime in April with all members at their desks as in a classroom and collectively fill out their tax returns. I would bet that not one in ten of them could compute their own taxes now.

  •  Somebody explain (3+ / 0-)
    Recommended by:
    NoMoreLies, Toon, enhydra lutris

    to me what is wrong with the standard deduction, the child deduction, deducting mortgage interest and deducting state taxes. The idea that the reason that the upper 400 income earners pay so little in taxes is because they get to take a little bit off for their kids is silly on its face. They pay so little because they have fabulous accountants and can separate their income into the lowest taxed categories, like capital gains. Those categories, prior to Reagan, were in a single status for incomes over a million $ a year. It was called "unearned income" and was taxed at 92%. The problem with our current tax code is not that its too complex, its that its too flat. We need to return to a steeply progressive tax code with an upper income rate above 50% (70% was the rate that Reagan cut) and get back some of the loopholes Reagan closed. Tax simplification is a business community hustle.

    "If I pay a man enough money to buy my car, he'll buy my car." Henry Ford

    by johnmorris on Sat Apr 18, 2009 at 08:03:31 PM PDT

  •  I am for eliminating a lot of the loopholes (0+ / 0-)

    and deductions, but if this is done, greatly increase the standard deduction and exemption amounts. Reduce federal income taxes on those earning less than say $125,000 or so, and decrease the FICA tax rate to 3 or 4 percent and make it apply to all forms and amounts of income. Meanwhile, in exchange for lowering the income tax rate, tax nonwage/nonprofit passive income such as capital gains at the same rate as wages and profits, and steeply increase taxes at the top end of the scale (top 1-2 percent of income earners). There is no reason that the top marginal rate should not exceed 50%, as it did from 1932 through 1981.

    In exchange for lower social security taxes and income taxes on the bottom 98 percent of Americans, and a simpler tax code, tax waste and pollution instead of income. Carbon taxes and waste taxes(tipping fees, a national bottle bill, and embodied energy taxes for items that are not readily reusable, compostable, or recyclable, along with forcing manufacturers to deal economically with end of product lifecycle consequences) would be good tax policy and help capture the externalities of our environmental degradation. This would also put us on the path to the desirable outcome of a steady state economy.

    Longer term, phase out the tax deductibility of biological children after the second child. Its time to quit subsidizing out-of-control population growth.

    "There's a bailout coming, but it's not for me, it's for all the creeps watching the ticker on TV"-Neil Young

    by NoMoreLies on Sat Apr 18, 2009 at 08:39:58 PM PDT

  •  Have a new income bracket (0+ / 0-)

    50% for those earning more than $5M

    DONATE! McCain=Bush 3rd Term--US worst nightmare; Stop Republican obstructionism- Elect a Democratic Majority.

    by timber on Sat Apr 18, 2009 at 09:37:04 PM PDT

  •  Federal sales tax on internet sales (0+ / 0-)

    Money gained to be used for health care

    DONATE! McCain=Bush 3rd Term--US worst nightmare; Stop Republican obstructionism- Elect a Democratic Majority.

    by timber on Sat Apr 18, 2009 at 09:42:58 PM PDT

  •  What is "total income"? (0+ / 0-)

    Consider someone with a rental property where the costs of the  property exceed the rental income- should the owner pay taxes on the income or the net? Or someone who sells a stock, but has costs to do so- or someone who owns a shop and has income ( sales) but  had to buy the stuff he sells... Once you start using net income, then the whole idea gets much murkier. And what about unreported income ( like my contractor who gives a discount for cash payment...)

    A simpler plan is a value added tax on all pruchases.  then unrepoirted income is irrleevant, and everyone is encouraged to save.

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