I said taxes on ALL income.. Everything that comes into the banks or ownership of someone. 20% on EVERYTHING, no matter what. In addition to 20% taxes on corporate profit phasing over to a 20% tax on corporate income eventually(if ever possible).. In addition a 20% VAT on purchases.
Do you hate low income workers? Please, do some calculations using your numbers and compare that to current U.S. policy. The lowest income workers would be
so totally screwed by your plan.
This would be a fair system and they are "set terms", because the 20% would be unchangeable, just as the 10.000$ isnt suppose to cover ALL living costs, just make it smoother for the poor.
The system you describe would be fair in your own mind. Currently, the U.S. system offers a deduction of $9350, so your $10,000 deduction offers little relief. Tax tiers in the U.S. start at 10% and end at 35%.
You model just seems overly complicated and unpredictable, in addition it makes it easier for government to increase tax pressure, they can just add costs and then the pressure would go up.
To those of us who aren't intimidated by common logarithms, my plan is every bit as straightforward as yours: all players calculate their tax liability using the exact same formulae. When calculating the tax liabilities in my earlier post, I found the 2009 U.S. rate tiers to be the most complex, but not by much.
The exception is not suppose to cover all living costs. Its just suppose to make the pressure a little less on the poor, and to make it fair, the rich also get exception on the first 10.000$..
When the exemption doesn't cover all necessary living costs, you will have a great many low-income workers getting crushed by their tax liability, or choosing between paying taxes and having the bare necessities for life. Frankly, I think that's a
very bad idea because it makes government policy unnecessarily oppressive to lower income workers. These are precisely the folks who need every bit of economic opportunity that they can get.
If a tax policy can be structured in such a way to offer opportunity through tax relief (rather than food, housing, employment, and/or utilities subsidizes), that is, IMO, a good thing. Rather than regarding my plan as "penalizing the wealthy," you could regard it as "tax relief for the not wealthy."
And, by my plan, as a lack of wealth increases, so does tax relief--over a much broader income spectrum than current U.S. policy--which, in turn could translate to less government spending on subsidies for the lowest income earners.
Those would make all the difference in the world for someone making 30.000$, since they would only pay 20% tax on the remaining 20.000$. For someone making 150.000$ the difference would be less, but fair since he also get the same exception.
Under your plan, someone grossing $30k/year would have a tax liability of $4,000. Please, compare that liability to the current U.S. policy and my proposal. Oh, wait, I've already done that for you in a previous post.
Then we are back at the beginning again. Its just not fair. Why should a guy be punished for making more than someone else by paying more tax per dollar earned? Thats just discrimination.
Some interpret "fair" as "we all have approximately the same tax liability, since we all have approximately the same access to government services and protections."
Some (like you) interpret "fair" as "everybody uses the same linear formula to calculate tax liability."
Some (like me) interpret "fair" as "everybody uses the same logarithmic formulae to calculate tax liability."
Some interpret "fair" as something else.
As I've said in a previous post, a system that's regarded as fair by all its participants just won't happen, so maybe we should move the objective from
fair to
pragmatic. By my plan, current U.S. tax policy,
your plan (or
any policy which ties a tax liability to income), the folks who make more money will have higher tax liabilities than those making less. Why isn't
that discrimination? Because the liability formulae doesn't use a logarithm?
Do you think the guy making 30.000$ should be excused for his failures and that his lifestyle should just automatically be adjusted for taking the wrong choices? There is probably a reason he is making 30.000$ instead of 150.000$.
That's right, everyone who's earning $30k/year must not want to earn more. Blame the low income workers for their own misfortune. And maybe the reason he's only making $30k/year is that he can't afford the continued education that would increase his value in the employment market. Maybe he suffers from a health condition and has high medical costs. Maybe his ARM readjusted and his mortgage payment skyrocketed. Maybe he was earning more, but his employer moved his job to where labor is cheaper and he had to take what he could get in a competitive employment market. Maybe Bernie Madoff took off with the investment portfolio that the guy was living off of. But none of that could possibly have happened, because at $30k/year there could never be any situations beyond his immediate financial control, so it must be his fault that he's not doing well, therefore a $4,000 tax liability must be perfectly fair. Come on...
That there you are talking about is just HARDCORE and unfair socialism. In Europe socialism is completely different, its the poor who benefit the most from tax revenues, not paying much less per € they make, which they do, which is unfair, but the difference is not as big as in "capitalist" America. Socialists..
Again,
any plan that ties tax liability to income is redistributive. So if you call a tax plan "socialist" just because high earners have a higher liability, your plan is as guilty as mine or current U.S. tax policy.
I just left out the last huge part of your post, because that is the exact thing we do not need, a tax system should be easy, predictable, transparent, fair for all, and have no loopholes nor exceptions.
The last huge part of my post was precisely where the rubber meets the road. You're going to have a tough time selling your plan to the majority of the U.S. (who earn less than $80k/year, the point where the respective tax liabilities of your plan, my plan and current U.S. policy are roughly the same). In 2007, the median
household (not individual) income in the U.S. was $50,233.
A single filer with a gross I of $50,233 (using the same settings as in the earlier post):
US: (I - D = $40,883), L = $6,408
DAR: (I - D = $29,233), L = $6,528
MZ: (I - D = $40,233 ), L = $8,047
Now let's see what would happen to total household liability (HL) if that $50,233 of household income happened to be split by two earners, each earning about $25,117 and filing singly:
US: (I - D = $15,767), L = $1,948, HL = $3896;
DAR: (I - D = $4,117), L = $744, HL = $1488;
MW: (I - D = $15,117), L = $3,023, HL = $6,046
Good luck selling your proposal to a majority of US taxpayers.
Regards,
DAR
