Comment: My idea would be founded on the concept that people should earn and KEEP what it takes to take care of themselves, BEFORE they ship it off to the government. This pertains especially to people on the lower ends of income, those earning $10,000 to $25,000 who barely make enough after taxes to take care of themselves and their families. In fact, for these people, they barely make more after taxes than they would on welfare, especially if one includes other benefits as food stamps and Medicaid. As for deductions for the home mortgage, this does not make home ownership any more affordable: the cost of housing is already inflated to take this into account, as any real estate broker or home builder will tell you. All it does is enrich a small segment of American industry, the aforementioned and upper middle class homeowners, sucking up huge amounts of "dead" capital which cannot be used to create jobs or, through lost taxation, improve the public domain. My proposal would then be: 1. ALL income up to $15,000 would be tax free, i.e. no income tax would be witheld on ANY salary until this amount is reached. Exemptions would be allowed for $5,000 per family member. 2. Thereafter, the tax rate would be 10% up to $100,000, 15% up to $200,000 and 25% thereafter. 3. All deductions would be abolished. People can choose whatever they want to do with their income, but the government has no business influencing one use or the other (which inevitably ends up favoring a few groups to the exclusions of others). 4. All income would be subject to the above rates. Capital gains should not be favored any more than any other form of income, nor should dividends. If favorable treatment for these is retained, then INTEREST of all kinds should also be given the same treatment. 5. The premise behind the above is that since you lower the rates significantly for the vast majority of tax payers, you don't need to provide the "backdoor rate reductions" implicit in the deductions currently allowed. Billions of dollars currently wasted on auditing "specious" deductions would thus be saved, and returned to the IRS to focus on INCOME unreported. 6. As for businesses, they should be taxed based on GROSS REVENUE received, albeit at a lower rate of 5%??? As indicated, EXPENSE would be irrelevant. American business can then focus on being cost efficient without regard to "cooked" expenses to avoid taxes. Once again, billions of dollars wasted on auditing expense (to ascertain profit) could thus be returned to the economy. In sum, you allow the working poor to keep what they do earn, so they can save and better themselves (thus reducing GOVERNMENT EXPENSE OF WELFARE) on up into a lower middle class income, after which you start taxation upon those then able to give up their hard earned income. On the (no) deductions side of the equation, billions of dollars wasted on dubious expenses whose sole purpose to avoid taxes would thus be channeled to better use. The IRS could focus it's attention on unreported INCOME without wasting time on expense audits. Thank you for your attention and much luck to you, Maude Ham |