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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.
Income Tax
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.
For instance:
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.
Transaction Tax
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.
