Subject: A few thoughts to share Comment: Dear Mr. Mack and The President’s Advisory Panel on Federal Tax Reform: Here I have a few thoughts to share and thank you in advance for your consideration. No single tax system is representable. Only a combination of tax systems works. To be fair to everybody and encourage people to work and work hard and contribute to grow of our economy, a combination of a 10%- 15% income, consumption, and luxury tax system will work better than the current system. The current system taxes heavily and unfairly on the hard working group – middle class of Americans (two income family’s gross income between $70,000 to $200,000). This group of people is actually the engine of our economic grow. They work 8 hours or more a day. They earned every dollar they made. But the current income tax system taxes this group of people the hardest with the highest regular tax rate and many of them got hit by AMT. The current tax system taxes little or none for “poor people” and “no incomers”. This group of people gets most, if not all, of the government benefits which are funded by taxing the middle class. Examples of benefits they get include earned income credit for federal income tax, first priority for public school and low income housing, and all kind of welfares. I am not saying no help to these people. Necessary assistance is needed but the current system needs to be changed because this system creates a big problem – poor by choice. A combination of a 10%-15% income, consumption, and luxury tax system can fix most of the problem for the following reasons: 1. A 10% - 15% income tax system is simpler and lower in rate than the current system. The lower 10% rate helps low income people. These rates applies to all sources of income including wages, interests and capital gain. Lower rates encourage people to work and work harder to earn more. 2. A flat rate (at 8%) consumption tax on everything except necessary food consumption treats everybody fairly. If you spend more, you pay more. This encourages savings which will turns into more interest income and investment for their future. In addition, since the streamline sales tax group have done most of the jobs, the consumption tax can based on that and gets an easy start. 3. A luxury tax is in addition to the consumption tax for purchases of luxury items, such as yachts, private jets, high end vehicles and other defined high end items. This is a tax on high income people. Place a higher rate on their purchases is easier than tracking down how much they made because that is tax on what they are willing to spend to get high quality livings. The purpose for the tax reform is to simplify the current income tax system and to be fair to everybody. This combination is for sure fair to everybody and simpler than the current system. In addition, the new system also encourage people to work and save for their own future. In return, it releases the government in some degrees from social security assistance and all other types of governmental welfare spendings. |