Edwin J. Feulner: A Flatter and Fairer Tax Code: "The answer is a fair, flax tax with a generous personal exemption, so the tax burden doesn't fall disproportionately on poor people. All income would be taxed once, at a flat rate. Taxpayers could fill out their return in minutes and mail it in on a postcard, instead of struggling for days and then stuffing form after form into an envelope.
All these reforms probably will be a tough sell in Congress. But departing Sen. Don Nickles of Oklahoma has an idea that could speed the transition: Allow taxpayers to fill out returns under the current system and under a reformed, flat-tax system. Then they could put the returns side-by-side and file the one that benefits them. Most people are sure to prefer the simple system, especially since it will usually save them money in the long run."
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Quote: "The answer is a fair, flax tax with a generous personal exemption, so the tax burden doesn't fall disproportionately on poor people. All income would be taxed once, at a flat rate."
If this is the final proposal I would leap for joy and gladly support it. There are two key things in that statement though that the current administration is NOT in favor of.
The first, say the format was a 25% flat tax with an exemption on the first $30,000 in income (the numbers can be changed to be revenue neutral or whatever, but this could be pretty close).
Let's take a look at four families with varying levels of income.
(A) $20,000 = $0 tax (perhaps even a negative income tax). Take home pay $20K. Actual tax rate = 0%.
(B) $50,000 in income. Tax equals ($50K - $30K) * 0.25 = $5,000. Take home pay is $45,000. Actual tax rate is $5K/$50K = 10.0%.
(C) $80,000 in income. Tax equals ($80K - $30K) * 0.25 = $12,500. Take home pay is $67,500. Actual tax rate is $12.5K/$80K = 15.6%.
(D) $200,000 in income. Tax equals ($200K - $30K) * 0.25 = $42,500. Take home pay is $157,500. Actual tax rate is $42.5K/$200K = 21.25%.
So that is actually a very PROGRESSIVE tax, as it should be. And as such, the Bushies are not going to recommend it.
The other part of the statement is that "ALL income will be taxed at once." All income equals money gained no matter the source, such as capital gains, inheritance, as well as wages. That isn't what the Bushies want at all. They want to eliminate taxes on capital gains and inheritance so that if someone was left a large amount of money they could retire and never have to pay income taxes again. What an incentive for work!
I sort of doubt this will happen for exactly that reason. However, I don't think it's the "bushies" who are preventing a progressive tax system, but the entire elite system of government we have been supplying with unreasonable amounts of power since 1876.
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