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Tax Reform

  1. hottopics profile image62
    hottopicsposted 5 years ago

    http://s2.hubimg.com/u/4975877_f248.jpg
    As the national debt grows solutions not rhetoric is what is needed. First we must make substantial spending cuts from the budget. That will be a good start to lowering the debt but, the cuts alone will not be enough. We must also raise revenues that come into the Federal Government. Some say we should raise taxes. That would raise funds streaming in. Is that a good way to go? Economists believe that would hurt the growth of this recovering economy.

    Instead of raising taxes perhaps we should look at the tax system itself. The one issue all Americans agree on is fixing the tax code. The tax code is complicated and grows every year (see the chart at the bottom of this article). Today the tax code is 72,536 pages long. It has grown more than 3,000 pages in the two years of the Obama Presidency. So much for the President’s claim of cutting taxes. What needs to occur is an overhaul of the current tax code. Some say the code is fine; all we need to do is raise the taxes paid by Americans that earn over $250,000 per year. While it would increase revenue, the amount would not make much of a difference. Some say a flat tax is the way to go. While there is some merit to that proposal, it would not be a fair system since all workers will pay the same taxable percentage. So why not combine both proposals, raising the taxes on the wealthy as well as tiered flat tax system based on income. Think about it, No more itemized deductions. No more loopholes (everyone pays no more paying nothing!!!). No more pages and pages and pages of forms. No more tax attorneys (!) A lot fewer to no audits. A much less powerful as well as much smaller IRS. (We can all agree on that, right?). The percentage in a flat tax tier system would be the same as currently in use by the IRS.

    Single Filing Status

    · 10% on income between $0 and $8,375

    · 15% on the income between $8,375 and $34,000;

    · 25% on the income between $34,000 and $82,400;

    · 28% on the income between $82,400 and $171,850;

    · 33% on the income between $171,850 and $373,650;

    · 35% on the income over $373,650; plus $108,421.25

    Married Filing Jointly or Qualifying Widow(er) Filing Status

    [Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]

    · 10% on the income between $0 and $16,750

    · 15% on the income between $16,750 and $68,000;

    · 25% on the income between $68,000 and $137,300;

    · 28% on the income between $137,300 and $209,250;

    · 33% on the income between $209,250 and $373,650;

    · 35% on the income over $373,650; plus $101,085.50

    This would be a tax on income that everyone can agree is fair. In addition to the revenue this raises, the IRS budget could be slashed significantly. We would not need as many employees, office space, overhead,etc. This would be a considerable saving for the budget. So how would Americans report their income yearly? Here’s one way it could work. , a postcard system sent to them from the IRS..

    Families get the postcard. They have two choices. Write their labor income and tax withheld from their W-2 form. Multiply the labor income by the percentage based on their income bracket. If it does not match the withholdings the taxpayer would pay any shortage or get a refund on any overage. If the withholing is exact, simply mail in the completed return.  Once complete the card could be mailed back to the IRS or go online and file the tax return.

    That system takes care of those who have enjoyed not paying taxes at all taxpayers’ expense. Next, there needs to also be a flat tier tax system in place for businesses. Again, no more not paying taxes. Finally, the last item that needs to be addressed to bring in more revenue. If your company operates, sells products, or generates income in any way within the United States, it does not matter if your company is based in the United States or abroad, YOUR COMPANY WILL PAY TAXES! In addition, if your company has received jobs that have been outsourced from the United States, those employees will pay an income tax to the United States as well ! Wonder how many jobs would return to the US and put Americans back to work?

    This is one idea. It would make a good dent in the budget by way of savings in the IRS, and it would generate a good deal of revenue to be applied to the deficit. Not to mention how much it simplifies the tax code. Sound like this could work.

    1. kevin.howell profile image73
      kevin.howellposted 5 years ago in reply to this

      Great Idea, but wouldn't the fair tax be a better way to slash spending?  Income tax is uncapitalistic.  Why should the American people try to work harder when they are penalized by taxes.?

      1. livelonger profile image88
        livelongerposted 5 years ago in reply to this

        The problem is that "slashing spending" is always described in vague generalities. The vast majority don't want their favorite pet programs cut, and that is as true for the right as is it for the left.

        It's a whole lot of magical thinking: I want lots of stuff but don't want to pay for it.

        1. hottopics profile image62
          hottopicsposted 5 years ago in reply to this

          Live,

          Not sure what you missed. I was very presise as to what to cut. I understand people want their pet projects, but that is part of what got us to this point. Comments like it is a whloe lot of magical thinking is exactly why nothing gets done.

          1. livelonger profile image88
            livelongerposted 5 years ago in reply to this

            Where?

            You wrote a lot about how you'd restructure income tax. You said almost nothing about cutting spending.

            I was responding to Kevin who said that we should cut spending. My point is that everyone wants to keep just about everything we spend money on now.

            1. hottopics profile image62
              hottopicsposted 5 years ago in reply to this

              Live,

              My apologies, I thought I was responding to my article about the budget.

    2. Bible Studies profile image80
      Bible Studiesposted 5 years ago in reply to this

      Why don't we keep it simple, and a little more fair. The prices of everything is going up. What use to be the middle class is now becoming the poor class. What use to be the poor class is just barely hanging on, or have lost everything already.

      Married status doesn't matter.

      5%          0 - $25,000
      10%        $25,000 - 100,000
      15%        $100,000 - $500,000
      20%        $500,000 - $1,000,000
      25%        $1,000,000 - 1 billion
      35%        1 billion and over

      Or really keep it simple:

      10% across the board for federal, state, and local.
      Eliminate all other taxes.
      Let the feds, state, and local fight for % of the 10%.

      Send one form.
      How much did you earn? ____________
      x 10% or see chart             ____________
      Total                                      ____________

      Business the same thing, except instead of earn, it would say profit. The business would have to show earnings - expenses = profits.

      1. wilderness profile image96
        wildernessposted 5 years ago in reply to this

        My son is a recent college graduate; earns $24000 per year to support a family of 6.  You would take $2400 of that for taxes, leaving $300 per person per month to live on.  Could you do it?

        1. Bible Studies profile image80
          Bible Studiesposted 5 years ago in reply to this

          ??? If your son is making $24,000 - 10%(2,400) = $21,600. That is more than what my family makes in a year. Yes I could do it, and am doing it. Yes, we give 10% of our net to the church.

          $21,600 / 12 months = $1,800 monthly. 

          With my 10% flat rate across the board would take care of federal, state, and local. All other taxes would be eliminated such as sales tax, property tax, and any other type of tax you can think of. Your son would have more money under this than the current system.

          If your son is one person, where did the $300 per person come from?

          With my other idea your son would only be paying 5% in tax, but still have all the other taxes to contend with.

          As hottopics said with the current system, your son should have 15% or near taken out of his check in the current system.

          1. wilderness profile image96
            wildernessposted 5 years ago in reply to this

            $1800 / 6 people = $300 per person.  And you're right - he gets by, although the only paycheck deduction is FICA - he has no taxes deducted as he owes none.  The loss of $2000 * 10% = $200 per month for the family would create quite a hardship.

            1. Bible Studies profile image80
              Bible Studiesposted 5 years ago in reply to this

              Sorry, but that doesn't fly for me. Money is never broken down per person like that, since real finances don't work like that. If everyone in your family actually received $300 from your son personally, I don't know how you are surviving, since nothing would get paid.

              Neither do I know how your son is getting away with not having federal, state, and all that jazz being take out his check. My husband brings in a little less that that and has 12% taken out of his check every time claiming a family of 5.

              We do have a loss of little over $200 a month in taxes. No wonder you don't want the tax system to change even if it would benefit you in the long run.

              I would love to only have to pay a flat 10% which includes federal, state, and local. Then not to have to pay the extra 6 - 7% in sales taxes, not have to pay occupational tax, not have to pay school and property tax.

              Even if your son isn't paying on a mortgage, he still is paying occupational tax, and sales tax at the store at minimum.

              Heck for us 12% taken out of the check + 1% local + 7% sales tax = 20% in taxes already. That is just the minimum, and It just goes up from there.

              1. Bible Studies profile image80
                Bible Studiesposted 5 years ago in reply to this

                Don't forget about gas tax and cigarette tax if he or anyone in your family smokes. Add that on top of sales tax also. Wouldn't you love to see the gas tax and all other taxes disappear?

                1. wilderness profile image96
                  wildernessposted 5 years ago in reply to this

                  He has nothing but FICA taken out - after filling out the W-4 form indicating 6 people plus a mortgage they require no additional taxes.

                  You are absolutely right in that a 10% flat tax with no other taxes would be wonderful.  Unfortunately it won't run the country - as you point out you (and I) pay 20% (or more; you left out the 7.5% FICA) right off the top.  To reduce that to 10% simply won't work, and you haven't addressed the hundreds of additional taxes you pay.

                  I would love to see a true flat tax as I think it would reduce my taxes.  I would even be happy with 25 or even 30% if there were no other taxes anywhere, but I don't see it happening.

  2. Moderndayslave profile image60
    Moderndayslaveposted 5 years ago

    It sounds better than what is going on now and even what is being suggested now.Be we would have to be prepared for the lobbyists to come out of the woodwork for lawyers and large accounting firms.

  3. Doug Hughes profile image60
    Doug Hughesposted 5 years ago

    A good place to start to get educated about taxes is Center for Tax Justice. (CTJ.ORG)

    Because local taxes generally hit the poor harder than upper incomes,  you need to be careful about how you structure federal income tax below the poverty line. I highly recommend this very short non-wonkish summary.

    http://ctj.org/ctjreports/2011/04/ameri … _think.php

    Finish reading? OK Here's a second reading assignment . All numbers actually.

    http://www.census.gov/hhes/www/income/d … index.html

    Look at Table H-2.  You can see that there has been a steady march over time of income from the middle-class to the top 5%. The rich get richer - and dont pay much more than the middle class. If you look at the bottom 80% (by population ) you will note that their total earnings are LESS than the total earnings of the top 20%.

    What's that mean to people who hate numbers. If you have 100 people who are a fair cross-section of America, the 80 people who earn the least, will earn LESS than the 20 people who earn the most. That's a steep curve that gets steeper when you examine the top 20%. Looking just at that 20% -  the average income of the 'poor' half is 100K. That rises to an average of 241K. But when you get to the top 1%, the AVERAGE income is 1.25 MILLION per year.

    It's obvious (to me) that you need several more tax brackets at the top, because someone earning in the 'top' bracket as defined here is only making 20%  of what the AVERAGE person in the top 1% is making.

    1. wilderness profile image96
      wildernessposted 5 years ago in reply to this

      Doug, a couple of years ago I had a long discussion with a very liberal college student from California.  To make a long story short he was finally forced into a debate corner and stated that he had an innate right to take what he wanted from whom he wanted to spend as he saw fit.  AND that I did not have the same right.  He never appeared to see or understand the ethical conundrum of the statement.

      You have repeatedly given these forums the facts on how much the rich earn and how little the poor do, somehow coming to the end result that the rich should not only pay more because they earn more, but should pay far more even as a percentage of income. 

      I have never been able to solve the ethical dilemma I see from that point of view .  I understand that the poor cannot support the government (if we want government the cost must be borne by someone else as the poor have nothing to give), but the middle class could pay more by lowering their standard of living.  How do you resolve the morality of demanding that a few pay far more than others for the exact same benefits?  Are you in the shoes of that college student that rationalizes that he, and only he, has a right to decide how to spend the money of other people? 

      Is it because the majority rules and our elected politicians, as representatives of the majority of people, make the spending decisions?  Personally, I cannot accept that either, as most politicians are very happy to spend other's money simply to gain re-election.  They have no more ethical right to other's money for their pork barrel politics than you do for whatever reason you want.

      1. Doug Hughes profile image60
        Doug Hughesposted 5 years ago in reply to this

        On the ethics of progressive taxation, Teddy Roosevelt said it better than I ever will.

        “At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth……"

        1. wilderness profile image96
          wildernessposted 5 years ago in reply to this

          But who decides who are paid more than they have earned?  You?  The politicians?  Very very few people would agree that they are overpaid, and that includes those earning millions.  I very much prefer free enterprise as the tool to set earnings.

          Nor is self-government actually the topic here; rather it is the ability of the poor to take money from others via the laws passed that benefit only the poor.  Such as progressive taxation.  Again, few of the rich would voluntarily give up their earnings in taxation (and they don't) or govern themselves in such a way that it is required.  Nearly everyone is far more interested in "governing" others in the taxes subject; cigarette taxes, liquor taxes, progressive taxes, increased taxes on everyone but themselves.

          It is neither possible nor desirable to give everyone the same high value.  Some are "worth" more based on their work and production, some are "worth" less.  Some because of training, some from innate talent, some from large muscles or beauty but everyone is different and of different monetary values.  The best we can do is give everyone the highest possible value to himself and the country; this does not mean that that value is the same as the next man.

          The bottom line of progressive taxation is to make everyone earn as near as possible the same thing (defined as take home pay) and that concept is not equitable, ethical or socially advantageous.

  4. wilderness profile image96
    wildernessposted 5 years ago

    Some problems I see:

    How do you claim that everyone paying the same for the same benefits is not fair?  A graduated tax whereby some pay not only more but a higher percentage of income for the exact same benefits does not seem fair at all to me.

    What would you do with dependents?  The majority of people in the country are part of a family.  Would the single taxpayer rate apply to everyone (spouse + children) in the family with the income divided equally among them all?  Would a single family income be used with multiple people relying on one income being forced to pay a higher percentage because of that?  Would a "deduction" be given for each person as is done now?

    A single person can't live on $8400 per year, yet you would take an additional $800 per year from them.  From their food budget perhaps?

    And business taxes is a whole different ball game.  Without thousands of tax deductions available much of the social engineering accomplished through the tax code will not be possible.  How will you promote the use of alcohol in gas without tax breaks?  How will you rebuild a slum without tax breaks to business to operate there?  How will you "encourage" research into electric cars or wind energy without tax breaks?

    1. hottopics profile image62
      hottopicsposted 5 years ago in reply to this

      Why should I pay taxes and companies do not. If you want to invent and research into electric cars or wind energy or anything else, you do that on your dime. It is a cost of doing business. When you perfect the electric car and start selling them for large profits, it is me that is buying. the profit you make pays for the research you did. When you sell them, are you going to give me a discount because you used my tax money for development. I doubt it.I do not see drug or oil companies giving me a break for there research based on tax breaks. What was their profits last quater? Oh yea 10 billion dollars. But they got a tax break. That system works real well.

      1. wilderness profile image96
        wildernessposted 5 years ago in reply to this

        Actually I agree with you, I merely point out that our tax code is more used more to define society by such things as tax breaks than it is to actually gain income. 

        However, R&D is part of the cost of doing business.  Would you tax companies on their business costs?  In other words, tax every dollar that comes in the door without regard as to what goes out?  Companies that operate on a slim profit margin would quickly go broke, while those that actually make far more profit on a smaller case flow would get richer.

        And if legitimate business costs should not be taxed as income, what is legitimate?  First class airfare on the old Concorde?  $300 a plate "luncheons" for customers?  Advertising?  A company car for an executive?  High (or any) salaries?  This kind of thing will always be a fight as companies figure how to compensate VIP's and have the general public subsidize the cost through lower taxes, yet there are business expenses that should be deductible.

        1. hottopics profile image62
          hottopicsposted 5 years ago in reply to this

          You cannot tax companies on the cost of doing business. I am saying tax companies on their profits. You are also right about legitimate costs. I thought long and hard about this subject. To tell you the truth everything I came up with before the idea I wrote about has ways for companies to cheat on writing off expenses. It just seemed this idea had the least way for the cheating, which will happen no matter what happens in the furure

          1. wilderness profile image96
            wildernessposted 5 years ago in reply to this

            Deny any advertising costs; kickbacks to buyers and expensive lunches as well as expensive "shows" will end.  Companies will have to pick up the cost without a tax break, but the abuses will end.

            Limit travel expenses to $.35 per mile, straight line travel, $100 per night motel and $50 per day for meals.  Again, if a company wishes to spend more they can, but taxpayers will not subsidize their gifts to high ranking employees.

            ALL payment to employees, whether cash or other valuables (such as company car or free golf lessons or a weekend at the company lodge) taxable as income to the employee.  Any "taxup" by the employer is not an expense unless taxed to the employee.

            Any recreational benefit (fishing lodge, on site gym, etc. is non-deductible)

            Companies will fight it tooth and toenail, but it would help a lot!

            1. hottopics profile image62
              hottopicsposted 5 years ago in reply to this

              Good Ideas. Check out the discusion this article I wrote created. Excellent responses by everyone. Each one has expressed their opinion, no name calling like you read after many articles written. If congress would act like everyone here, think of how many of our current issues would be solved.

    2. Bible Studies profile image80
      Bible Studiesposted 5 years ago in reply to this

      Wilderness,

      "A graduated tax whereby some pay not only more but a higher percentage of income for the exact same benefits does not seem fair at all to me.

      What would you do with dependents?  The majority of people in the country are part of a family.  Would the single taxpayer rate apply to everyone (spouse + children) in the family with the income divided equally among them all?  Would a single family income be used with multiple people relying on one income being forced to pay a higher percentage because of that?  Would a "deduction" be given for each person as is done now?"

      I see where you are dealing with the 10% flat tax idea. Ok, what if it changed a little bit?

      Each person is taxed individually. No deductions, no exemptions, no loopholes. All other taxes eliminated from sales tax to gas tax to cigarette tax to beer tax, to all the little irritating taxes called fees in utility and phone bills, and etc.

      0%             $0 - $20,000
      10%           $20,000.01 and up.

      Federal gets 7%, State gets 2%, and local keeps their 1%.

      In this way your minimum wage employees do not pay any taxes at all. Even if two minimum wage employees marry, since it is only individual tax, both of them would pay 0% taxes even if combined household income goes above $20,000. They would make more combined, and still pay no taxes.

      An individual would have to earn $11.00 an hour, well above current minimum wage in order to have to pay taxes. $11.00 an hour is more that what most businesses are paying their bottom line employees. If $20,000 is still too near poverty level, then raise it to $25,000 before starting to have to pay taxes.

      These large corporations can pay more to their employees, but greed gets in the way, and their top executives and investors get the bulk of the profits, while they cut their bottom line employees.

      I recently found out that Walmart sends their employees to the state to sign up for medical, hud, foodstamps, and everything else they may be able to apply for. So much for large businesses caring about their employees.

      1. wilderness profile image96
        wildernessposted 5 years ago in reply to this

        It seems to me that a more equitable system would be give a deduction for each person in the household.  The way you list, a married couple with two earners could earn up to $40,000 with no taxes, but the same couple with one earner would pay 10%.  In addition children (with no income at all) should be considered as well - they don't require the same money to survive that an adult does, but do require something.  Perhaps 10% over $5,000 after a $10,000 deduction for adult dependents and %5,000 for children.

        As stated in your other thread however, 10% to the government with no other taxes simply won't even begin to run the country.  It won't keep up the military.  It won't pay for SS programs.  It won't even keep up the infrastructure such as roads.  With no other taxes, I suspect the figure would have to be nearer 30% or even higher.  Whatever the figure, I think it would be fairer; everyone can make a basic minimal living (and a little more), but any money left for luxuries is to be taxed the same percentage to help run the country.

        Businesses to be taxed the same rate on all profits, but no tax on dividends or distributions of after tax profits.  It has already been taxed once, and that is enough.

      2. hottopics profile image62
        hottopicsposted 5 years ago in reply to this

        Bible,

        Walmart and other companies have been doing it for years. Now you know why some of our public systems are in such financial trouble. It is only going to get worse. That is why The Unions, Walmart and so many other companies were for Obama care. They all plan to drop healthcare coverage for their employees, pocket the money, and send the employees to the public health  care system.

  5. Moderndayslave profile image60
    Moderndayslaveposted 5 years ago
 
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