What would a tax system that is fair to people and businesses in all income levels look like?
In a recent book - which was originally written in the mid-1990's - the characteristics of a fair and effective tax system were listed. They included:
1) No personal files on the vast majority of citizens.
2) No income taxes, property taxes, estate taxes or tax withholdings from our paychecks.
3) Allow low incomers and volunteers to earn a tax refund.
4) Encourage all citizens to provide for their own basic needs.
5) Keep more U. S. jobs from moving overseas.
6) Allow small and large U. S. businesses to compete more evenly.
7) Stop giant foreign firms from transferring huge untaxed profits back to their home country.
The book concluded that these things could be done, and the resulting combined federal, state and local tax for every citizen would be exemplified by the chart below.
It also spelled out (1) how our nation could transition to this new system with a relatively easy four or five year changeover from today's multiple and complex tax arrangements, and (2) how today's consumer prices would remain essentially unchanged.
This typical tax chart results from a very simple three-part system consisting of:
a) A "National Dues and Credits" program for each year that combines every taxpayer's share of the federal, state and local budgets where they reside, and then lets them have credits that can eliminate what they owe by taking care of their (or their families') own needs such as housing, food, clothing and other necessities like medical costs, savings, etc. Low incomers and volunteers could then earn additional credits that would result in tax refunds.
b) A "National Sales Tax" that lowers present-day retail prices by eliminating all existing government costs now "hidden" in those prices (e.g. - property taxes, workers' compensation mandates, licensing fees and unemployment levies). Then, a single sales tax rate that is calculated each year by experts (i. e. - not by politicians) to cover those federal, state and local budgets is set for the nation; collected each day by businesses; and sent immediately to the "new" IRS who quickly divides everything and sends out to the states and local governments their portions.
While the new sales tax rate will be quite high compared to the levels we are used to now, the new total price (i. e. - the new retail price plus the new sales tax) will normally be the same or lower for the consumer because the retailer's price will be so much less than it is today.
In addition, these tax revenues will be paid by many people who now pay no taxes (including "illegals" and other tax non-filers). Businesses who "hide behind loopholes" or transfer huge untaxed profits to a foreign country will no longer be able to continue doing those things.
Perhaps best of all, no personal records are required on the vast majority of us, and no complicated and expensive tax forms must be filed by any of us. And because the revenues flow almost immediately to all types of governments, no withholdings are needed from our paychecks.
c) A "High Revenue Tax" that applies only to very wealthy individuals and extremely large businesses/organizations. This type of tax will never apply to the vast majority of us since it does not even start until the individual's or firm's yearly revenues amount to sums well in excess of what is required for a "very comfortable" standard of living. For example, if that level is set for a family at $300,000, they would owe the High Revenue Tax only on amounts above that. The tax rates would start low (e. g. - 2%), but grow steadily as their revenues continue higher and higher.
Individuals and businesses who fall in this category would be able to lower or even eliminate their High Revenue Taxes by the salaries and wages they pay (up to a reasonable limit), the domestic raw materials and inventories they buy to make or sell their products, and the charitable activities to which they contribute.
Many more details are available in Rendering Unto Caesar released by the publishing company in 2011.
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