Saturday, February 18, 2012
1. Federal Income Tax: All income and compensation is taxed at a 20% rate except:
- Income under a realistic poverty line (eg $15,000 for single), which is taxed at 2% instead
- Income used to pay for large medical expenses (>10% of income) is tax-free
- Income placed into tax-free education-retirement savings account (with modest caps)
- No other adjustments, deductions, or exemptions
- Effective rates: 10% on $60,000; 15% on $160,000; 19% on $1,000,000.
- Totals about 65% of federal revenue.
2. Federal Net-Worth Tax:
- All net worth (accumulated wealth), except the first ~$800,000, is taxed at a progressive 1-1.7% rate.
- This tax replaces property, capital gains & estate taxes. Net-worth is the best measure of how much a household has profited from the economic infrastructure governments (all taxpayers) provide.
- Effective rates: 0.2% on $1million; 1.0% on $3million; 1.7% on $27million and over
- Totals about 20% of federal revenue.
3. Federal War Tax: Everyone contributes to any war effort: A 6% surcharge increases a federal taxes bill of $10,000 to $10,600 while the nation is at war.
4. Eliminate all these taxes:
- Social Security Taxes – Social Security & Medicare funded from general revenue instead
- Estate Taxes & Capital Gain Taxes – Replaced by more efficient and fair Net-worth Tax
- State Income Taxes in their current form – Replaced by more efficient and fair surcharge – See #5
- Property (real estate) taxes – Replaced by more efficient and fair surcharge – See #5
- Sales taxes, tolls, etc. – Replaced by more efficient and fair surcharge – See #5
- Corporate Taxes – Profits distributed to corporate owners and taxed as income.
5. All states and local governments eliminate all their current taxes and instead set and collect a surcharge on a household’s combined Federal Income and Net-worth Tax.
6. Excise taxes only on products that have a cost to society that is not reflected in their price … e.g. cigarettes, gasoline. Totals only about 10% of federal revenue.
Update: The post should have stated that the proposal is by Peter Gloor (details here).