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 would suggest: 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 directly. 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). Mike Burton 10 Morning Sun Irvine, CA 92603 |