It’s a new year, and you know what that means: your accountant will send you a little note reminding you to get your records together for tax time!
I can’t stand tax time. It’s only partly the money. We Americans live in a great country, and I’m willing to pay my share of the rent.
What gets me is the complexity of the laws and forms. I don’t like them, don’t understand them, and always feel like I’m doing everything wrong.
So here is the David Seidman Plan for Simple Yet Fair Taxes.
1. Tax all income — wages, interest, capital gains, inheritance, all of it — at the same rate. Today, they’re taxed at different rates; but as my conservative friends have said, the government shouldn’t be in the business of picking winners and losers.
2. Make the top personal income tax rate — the percentage that the government takes from a person or couple’s income — no greater than the top corporate tax rate. People matter at least as much corporations, so personal income should be taxed at a rate equal to or lesser than the corporate rate.
3. No deductions except charitable donations. You want to do things that get deductions under today’s laws — have kids, get a mortgage, start a company — well, that’s up to you. The government won’t reimburse you for it.
4. The tax rate should be progressive and graduated but simple.
A person who earns up to $50,000 per year (or a couple at up to $100,000) pays 0% tax.
A person at $50,000.01 to $100,000 / a couple at $100,000.01-$200,000: 1%.
A person at $100,000.01-$150,000 / a couple at $200,000.01-$300,000: 2%.
A person at $150,000.01-$200,000/ a couple at $300,000.01-$400,000: 3%.
And so on, up to 50%, which would be the top tax rate, no matter how high a person’s or couple’s income gets.
1. A 1% tax on every purchase or trade, whether it involves physical property, shares of stock, professional services, or anything else.
2. The only exceptions are the essentials of living: food, clothing, shelter, and medical. Transactions involving these items go untaxed.
2a. Some “essentials,” of course, aren’t equally essential — a fancy gown used only to walk awards-show red carpets isn’t as necessary as a coat to protect the body from freezing — but to keep things simple, all food, clothing, shelter and medical will be classified as equally essential.
2b. The only exception to the rule of essentials: items bought as investments. For instance, if a person owns a house and uses it as his principal residence, his purchase of a second or third house counts as an investment rather than as a shelter, and purchases of those houses get taxed.
These ideas have their flaws, I’ll grant you. For instance: Under this plan, self-employed people would get taxed twice for the things that they make, do, and sell — first as a transaction, and second as their personal income. That seems unfair to me. There must be a fair solution, though, since many states levy sales taxes as well as income taxes and must have encountered this problem already.
The numbers that I’ve listed can change. I don’t know if the percentages and dollar amounts that I’ve listed would be enough to fund the federal government.
But the basic framework makes sense to me.