Subject: Tax reform (Stocks, IRAs, Sales Tax, Mortgage, charity, AMT,tips, Business) Comment: I favor a flat, straight income tax rate of 18% for all Americans, no matter what one's income level is, or, from what source. Taxpayers will no longer be able to pay less taxes with deductions- for anything, since the tax rate will be constant- and simplified. NO DEDUCTIONS- except for the poorest of Americans. For all taxpayers, (taxpayers will have burden of proof) yearly taxable earnings less than twice the inflation adjusted federal poverty income level, would be exempt from federal income tax. {The federal poverty income level, should be based on the following factors: location of taxpayer and the cost of living in that specified area; (2) actual gross income; (3) cost of basic necessities (food, water, clothing, health care, shelter [ie: rent], etc.); and (4) state and local taxes paid; (4) cost of basic amenities (utilities: gas, electricity, water, etc.; educational costs, medical costs, etc} If for any reason, a taxpayer earns more than $1 million annually, adjusted for inflation, that taxpayer would be subjected to the tax rate of 25%, from all sources. Likewise, a taxpayer earning more than $10 million annually, adjusted for inflation, that taxpayer would be subjected to the tax rate of 36%, from all sources. *** STOCKS *** Money earned from the stock market is often found to be nothing more than "paper money"- money that is merely written in one's brokerage account, and therefore hard to tabulate as true assets or earnings. Therefore, money earned this way would be subjected to "paper money" taxes, with the rate specified earlier. This tax would only be levied upon the taxpayer when he actually cashes out the money from his account- even if the taxpayer does not do so for years, decades, etc. *** RETIREMENT ACCOUNTS (401(k), IRA, Keogh's, etc.) *** Money earned, including "paper money" (see Section "Stocks"), and placed into any and all retirement accounts would be tax defered- if not already. Tax would be the same (18%) upon withdrawal. An additional 15% tax would be levied upon any taxpayer who withdraws any money from these accounts before the age of 65. No penalties would be assessed on the taxpayer if no money was withdrawn, or too much money was withdrawn after the account owner-taxpayer has reached "retirement age"- the only taxes (or fees) assessed would be on the amount withdrawn or used. *** SALES TAX, VALUE-ADDED TAX *** Taxpayers, who earn less than twice the federal income poverty rate, upon proof of purchases (proof is by sales receipts) and proof of income (from all sources), will be allowed reclaim this money back from the federal income tax paid. Violations, or any act of fraud, would subject the violator up to five years maximum in jail, and/or five (5) times the amount of taxes (plus interest) they would have paid, if honest. Regardless, no reform should include both a national sales tax and an income tax, our government should have one or the other, but not both. The reason is simple, having both would be extremely regressive and patently unfair for the poorest of Americans, and can have a deleterious affect on our economy. Even if taxpayers were able to "write off" these taxes as deductions, taxpayers would still have to wait to reclaim these, and the economy could possibly suffer as a result. *** OTHER TAXES *** Other taxes, such as property tax, vehicle fees, etc., would not be elgible for deductions, except if one's income status has been officially declared as "working class poor", "impoverished", or any other such definition, as to normally qualify them for city, state, or federal, aid. If a taxpayer qualifies for this deduction, he or she would be allowed to reclaim this money back from the federal income tax paid. Violations, or any act of fraud, would subject the violator up to five years maximum in jail, and/or five (5) times the amount of taxes (plus interest) they would have paid, if honest. *** MORTGAGE *** As specified earlier, no deductions. (Since renters have no such deduction for rent, it is only fair to "balance" taxes out by eliminating this deduction- or give renters a deduction, too.) *** CHARITY *** As specified earlier, no deductions- except for those earning minimal pay (minimum state and federal income). The given tax rate is low enough for one to give to charity without the problems of having to go through the process of figuring out how much is owed on taxes, since this low tax rate will already solve that problem- besides, regardless of one's position in life- whether rich or poor- Americans would still give to charitable causes, no matter what the tax rate is- or their current financial situation. For those who wish to give their entire, or nearly entire, yearly income, they may still do so. And, if they prove they have done so, they can pay no taxes- but, they will not be entitled to a refund on any amount of income taxes that was (over) paid. *** TIPS EARNINGS *** Currently, it is hard to determine what tax rate would be fair for those earning money through tips. This is especially true since tips would be subject only to those who were being served. Since there is no law requiring people to give tips (and shouldn't be), what's reasonable tax rate would exists to create a simply fair system- becuase if I was not particularly happy with the service given to me by a bellboy or a waiter, I wouldn't give him or her a tip- likewise, if I was particularly pleased with a bellboy's or a waiter's service, I would give more... Therefore, the only fair way is to assess a flat tax rate of 10% on all tips, no matter what the source or amount, unless the giver of tips (one who was served) actually files some proof with the IRS of how much tip was paid to a particular server. *** ALTERNATIVE MINIMUM TAX *** Would be scrapped entirely, or its tax rate readjusted to fit today's inflation rate- as if it had been done so all this time. Additionally, it would then be increased by 10%, and locked in as the new alternative minimum tax rate, and will be adjusted for inflation. *** BUSINESS *** Business should be required to pay at the same rate as individuals- but may be allowed to claim "credit" only if the money (profits) used was to create jobs in the USA, and only in the USA. However, if said business was to close (and workers to lose their jobs) for any reason, that business (with the exception of bankrupty or extreme loss of business financial stability {stability must be proven by business]) must pay the government specified taxes on delayed credit. |