Comment: I read in the LA Times today that you are soliticiting comments on
proposed tax reform. This is a great idea, in fact, I think all branches
of the government should do this on a permanent basis. Here is what I
1 Simplify the income tax code. There should be a small number of tax
brackets (at most 4). All income should be taxed at the same rate (no
special rates for investment income, but see below where I suggest
eliminating the corporate profits tax). The current deductions are mainly
OK (they should be state and local taxes, medical expenses, charitable
contributions, mortgage interest (one home only, not two), employee
business expenses). That should be it. The other several hundred pages of
the income tax code should go. There should be absolutely no tax
shelters. US citizens who put their money in an offshore bank should be
taxed as if the money were in a US bank.
2 There should be absolutely no tax subsidies for anything. If the
government wants to support something it should appropriate the money
3 The exemption system should be changed. The exemption for a
dependent child should be raised to the average cost of maintaining a
dependent child, something like $10,000 per year. There should be no
exemption for the tax-paying adult.
4 The lowest income that is subject to income tax should be raised
to about #20,000 per year per adult in the household. People with very low
incomes already have to make social security contributions; that tax
burden alone is very difficult for them to pay.
4 After eliminating all of the ways in which rich people can legally
avoid paying taxes, we should, in exchange, lower the top income tax
bracket to something like 25%.
5 Rather than taxing corporate profits we should tax the income that
comes from those profits when it is paid to somebody as dividends, capital
gains, or interest (at the same tax rate as anybody else). If it is
reinvested in the business it should not be taxed.
6 After lowering the overall income tax rate, we should make up the
difference through a variety of means, including possibly:
higher taxes on alcoholic beverages
a value added tax
A graduated tax on cars and trucks that get poor gas mileage, with
the rate increasing proportionally to how low the gas mileage is.
a higher gasoline tax (I know this will be unpopular, but in the
long run it will be necessary to our survival
7 Reinstate the estate tax. Stop calling it a death tax. It is not
that, most people who die don't have to pay a tax, the tax comes
only if you try to pass on an estate. I would exempt all estates
under $5 million and have the tax graduated something like this:P
5-10 million 5%
10-20 million 7.5%
2--50 million 12.5%
50-100 million 20%
100 -500 million 25%
500 million + 30%
increased penalties for tax cheaters and increase spending on tax
enforcement (this has been shown to be cost effective).
10 Morning Sun
Irvine, CA 92603