Tax Plans Revisited

Taxes, finance, economic theory, etc.

Tax Plans Revisited

Postby 4tees » Sat Sep 19, 2009 10:39 pm

Here is my updated idea on how to devise a better tax system

A Wealth Based Income Tax combined with Sales Taxes:

Part 1: Income Taxes with rates determined by Wealth

Only individual income is taxed. There are no more self employment taxes, property taxes, or any other personal taxes allowed of any kind, at any level, (other than some sales taxes discussed in part 2), states must also adhere to the same new tax rules.

All personal income gained in any way, shape, or form, (from pay, salary, business earnings, transfer of assets from business to personal, etc.) is counted as income, and all goods, services, assets, accommodations, etc that provide any form of personal benefit (no more loopholes, deductions, business “expenses”, business perks, or other free perks) are as well.

Business assets must be maintained entirely separately from and are not considered part of personal/household wealth. However to be considered a business asset the asset cannot benefit the private lifestyle of the business owner (or their household) in any way (no company cars, clubs, houses, etc)

Increases in the held value of assets you already own are NOT counted as income and will not be taxed (only gains at the time of sale will be taxed). However, Dividends or profits paid from interest bearing investments are income and will be taxed as such.

Individual tax rates are based on individual (single) or joint mean household wealth during the prior tax year, not on how much your income is today. These rates are then immediately applied to any income in the current tax year (no more withholdings options will be allowed and business owners must pay estimated taxes monthly). A 10% flat income tax rate would be applied for the lowest 30% of households, a flat tax rate of 15% for the middle 65% of households, changing to a linearly increasing progressive rate for the top 5% of households, starting at 20% and maxing out at 90% for the top wealth bracket (let’s say for arguments’ sake that the top 90% rate would apply to those with personal wealth in excess of $500M).

The value of an Inheritance, up to a value equivalent to 2 standard deviations above the mean national household wealth, would be excluded from taxation. But the inheritor would, in the tax year of inheritance, immediately add the inherited value to their wealth total from the prior year so that their new increased income tax rate takes effect immediately. This new rate will apply to the value of any Inheritance in excess of the amount excluded from taxation, which will be treated and taxed as regular income.

All individual assets of Americans that leave the country are taxed somewhere in the top bracket (let’s say 75% for arguments’ sake).

There will be NO corporate or business taxes, employment taxes, unemployment taxes, or other taxes whatsoever for companies (both foreign and domestic) making products in America on the portion of earnings paid to American owners, investors, and employees who wholly reside in the US. (those earnings are taxed as individual income when they are paid out to owners, investors, and employees)

All business earnings and assets by American owned companies that leave the country to any anonymous or unverified source are taxed somewhere in the top bracket (let’s say 75% for arguments’ sake).

Business earnings that leave the country (to verified foreign investors) are taxed at a competitive rate with other western nations.

All business earnings and assets by Foreign owned companies that leave the country are taxed at a competitive rate with other western nations.

Business earnings by American owned companies, entering the US due to overseas operations or investments are taxed at a rate to offset differences in labour costs in the country of origin when they are lower than in the US.

Part 2: Sales Taxes.
An “excess” sales tax would tax the portion of the price of an item that exceeds 1 standard deviation above the mean price for that class of item at the time of sale. The nominal tax rate would be 25%

Sale of large ticket necessities like the Primary home and up to 2 modes of transportation per household will be taxed on any portion of the price of an item that exceeds 2 standard deviation above the mean price for that class of item (this would only tax the most expensive 2.5% of these items). The nominal tax rate would be 25%

All Investment or Vacation Real Estate (any real estate other than your primary residence), will be considered excess and are taxed at a 25% rate at the time of purchase. The exception is Real estate required to expand a business in the U.S., and held entirely as a business asset. If later transferred to a private asset of the business owner(s) the original sales tax or the equivalent current sales tax (whichever is Higher) must be paid.

The seller of stocks, bonds, and other purely financial investments must pay taxes on any gains at the time of sale (as compared to the purchase price) at a 25% rate.

An additional “burden” sales tax of 50% will tax items that place a burden on society. Burden items are those things we allow because we are a free society, but that result in an increased financial burden upon others in society who responsibly choose not to use/do them. This would include tobacco products, alcohol products, recreational drugs, Snack foods, low nutrition fast foods, dangerous sports/thrill seeking equipment, gas guzzling vehicles, etc. This tax pays for the current and future services necessary to correct/repair the damage done by the burden activities.

There will also be a sales tax placed on foreign made products imported from nations that have lower rates of compensation for labour than is present in the US. This rate will vary based on the level of income and lifestyle disparity between the exporter’s labour force and ours, and will eliminate the disadvantage to American made products because of compensation disparity.
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Re: Tax Plans Revisited

Postby Thomas » Sun Sep 20, 2009 10:29 am

Too bleary eyed to study your post 4tees but I shall try later. For now wanted to add this to the mix. The point being that if everybody is not enrolled in a health care program the rest of us who are will be picking up the tab for emergency room visits etc.

Obama: Health insurance mandate no tax increase
WASHINGTON – President Barack Obama says requiring people to get health insurance and fining them if they don't would not amount to a backhanded tax increase. "I absolutely reject that notion," the president said.

Blanketing most of the Sunday TV news shows, Obama defended his proposed health care overhaul, including a key point of the various health care bills on Capitol Hill: mandating that people get health insurance to share the cost burden fairly among all. Those who failed to get coverage would face financial penalties.

Obama said other elements of the plan would make insurance affordable for people, from a new comparison-shopping "exchange" to tax credits.

Telling people to get health insurance is absolutely not a tax increase, Obama told ABC's "This Week."

"What it's saying is, is that we're not going to have other people carrying your burdens for you anymore," said Obama. "Right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase."


http://news.yahoo.com/s/ap/20090920/ap_on_go_pr_wh/us_health_care_overhaul
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Re: Tax Plans Revisited

Postby 4tees » Sun Sep 20, 2009 5:16 pm

I absolutely oppose the requirement for people to mandatorily participate in a For Profit health insurance plan, just as I have always disliked the requirement to carry for profit auto insurance. Health insurance will be far more costly than auto insurance, so If carrying health insurance is going to be mandatory, there must be either a government provided health insurance option, or health insurance must by law become a not for profit industry with compensation caps. Better still would be a government health system option or a not for profit health system option (again,with compensation caps).
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Re: Tax Plans Revisited

Postby etowah » Sun Oct 18, 2009 9:23 pm

4tees wrote:I absolutely oppose the requirement for people to mandatorily participate in a For Profit health insurance plan, just as I have always disliked the requirement to carry for profit auto insurance. Health insurance will be far more costly than auto insurance, so If carrying health insurance is going to be mandatory, there must be either a government provided health insurance option, or health insurance must by law become a not for profit industry with compensation caps. Better still would be a government health system option or a not for profit health system option (again,with compensation caps).


What's wrong with profits? Profit's produce jobs!!
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Re: Tax Plans Revisited

Postby etowah » Sun Oct 18, 2009 9:32 pm

When you refer to "self employment tax" are you talking about the 15.3% a sole proprietor pays, on
his federal return,
on net earnings from self employment to be covered under social security?
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Re: Tax Plans Revisited

Postby 4tees » Mon Oct 19, 2009 4:43 pm

etowah wrote:
4tees wrote:I absolutely oppose the requirement for people to mandatorily participate in a For Profit health insurance plan, just as I have always disliked the requirement to carry for profit auto insurance. Health insurance will be far more costly than auto insurance, so If carrying health insurance is going to be mandatory, there must be either a government provided health insurance option, or health insurance must by law become a not for profit industry with compensation caps. Better still would be a government health system option or a not for profit health system option (again,with compensation caps).


What's wrong with profits? Profit's produce jobs!!


Profits do not usually produce jobs. Profits can produce jobs if they are wholly reinvested in physical capital (the secondary financial market is not physical capital, physical capital is hardware that adds to/improves manufacturing capability) or research and development efforts here in the US, but they usually are not. In todays world profits are used instead to benefit a small group of investors, who usually re-invest them in secondary markets (which growing evidence shows are largely parasitic; hurting rather than helping the economy) and pay excessive compensation to top level executives, both of which provide minimal if any widespread economic benefit. If that same money was reinvested directly in physical capital, R&D, or was used to increase employee salaries, "profits" would be reduced (or even nearly eliminated) but the benefit to the economy, and the long term outlook for the corporation (which would grow in real terms), would be exponentially better.
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Re: Tax Plans Revisited

Postby 4tees » Mon Oct 19, 2009 5:01 pm

etowah wrote:When you refer to "self employment tax" are you talking about the 15.3% a sole proprietor pays, on
his federal return,
on net earnings from self employment to be covered under social security?


Yes, there would be no more specific tax for social security or medicare, for employers or the self employed. You must keep one thing in mind though. The tax rates I mention are just placeholders showing the proportion of taxation, the actual rates for each bracket would have to be determined (and likely adjusted several times) to match whatever the state and federal government budget requirements are (I could probably figure out real estimated rates, but you are talking about a ton of research and effort, far more than I have the time and possibly data to accomplish). Things like Social Security, Medicare (hopefully replaced by a nationalized medical care for all), the military, schools, infrastructure, police, fire, etc... still need to be paid for.
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Re: Tax Plans Revisited

Postby etowah » Sat Jan 23, 2010 8:49 pm

Profits produce jobs because the profit maker spends or invests the money in his community!


4tees wrote:
etowah wrote:
4tees wrote:I absolutely oppose the requirement for people to mandatorily participate in a For Profit health insurance plan, just as I have always disliked the requirement to carry for profit auto insurance. Health insurance will be far more costly than auto insurance, so If carrying health insurance is going to be mandatory, there must be either a government provided health insurance option, or health insurance must by law become a not for profit industry with compensation caps. Better still would be a government health system option or a not for profit health system option (again,with compensation caps).


What's wrong with profits? Profit's produce jobs!!


Profits do not usually produce jobs. Profits can produce jobs if they are wholly reinvested in physical capital (the secondary financial market is not physical capital, physical capital is hardware that adds to/improves manufacturing capability) or research and development efforts here in the US, but they usually are not. In todays world profits are used instead to benefit a small group of investors, who usually re-invest them in secondary markets (which growing evidence shows are largely parasitic; hurting rather than helping the economy) and pay excessive compensation to top level executives, both of which provide minimal if any widespread economic benefit. If that same money was reinvested directly in physical capital, R&D, or was used to increase employee salaries, "profits" would be reduced (or even nearly eliminated) but the benefit to the economy, and the long term outlook for the corporation (which would grow in real terms), would be exponentially better.
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Re: Tax Plans Revisited

Postby 4tees » Sun Jan 24, 2010 1:14 pm

etowah wrote:Profits produce jobs because the profit maker spends or invests the money in his community!


It is a proven fact, (not just my opinion) that the highly compensated spend FAR less as a percentage of their income than those earning a middle class wage or less. Since you don't seem to understand the implications of this, let me illustrate with an example.

Joe receives $1,000,000 in compensation. Joe spends $150,000 of that income in his local community (which does indeed generate additional jobs and income for others), and another $150,000 with large corporate entities (providing reduced local economic benefit). Joe invests the other $700,000 in a variety of investment vehicles that do nothing to generate productive economic growth at any level, and (as more and more studies are showing) may actually have a negative overall effect on the economy. Joes $1,000,000 in "profits" result in less than $200,000 in direct economic benefit ( approx $800,000 after the "multiplier effect" is taken into account), to produce economic growth at the local or any level.

Now let’s take that same $1,000,000 and distribute it amongst 20 families. This results in a "middle class" income of approx $50,000 each. Each of those middle class families spends approximately 95% of that income. That equals $475,000 spent locally, and $475,000 with large corporate entities. This generates more than $700,000 in direct economic benefit, ($2,800,000 after the multiplier effect is considered). This Far greater amount generates far more jobs, far more income, and FAR more beneficial economic growth than the same initial $1,000,000 did when given to a single person. I challenge you to find a single economist anywhere in the world who will refute this simple fact; most will go to great lengths to avoid the issue, but none can or will refute it.

It is a FACT that "Profits" are more beneficial to an economy the more evenly they are distributed. End of story
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Re: Tax Plans Revisited

Postby etowah » Sat May 15, 2010 8:29 pm

One things for sure.Taxes are on the way up.
We have a new health care law that many congressional members admit to not having read.
that burdens us with many new taxes.
Taxes on medical devices and taxes on suntan treatments are just two examples;
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Re: Tax Plans Revisited

Postby 4tees » Tue Jun 01, 2010 3:56 pm

Of course they are; we have to pay for bailing out the for profit financial industry, the incompetent US auto industry, and now have to subsidise the for profit medical industry. This is the "Capitalist" system loved and advocated by "conservatives" at it's finest; taking from the poor and middle clas to give to the wealthy.... is it not? :shock:
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