Tax Overview

The following few posts will all refer to the Federal Tax Code.  I do not claim to be a tax expert, but common sense and logic could make our tax system a lot simpler and fairer, and in this and the following posts, I will make my case to rethink the income tax, business taxes, social security and medicare taxes.

Before getting into tax specifics in following posts, I want to cover the broad strokes with this overview.  First, politicians must not be allowed to tinker with the tax code to incentivize behavior.  Every tax break in the code got there because some politician got votes or money for it.  Our tax code has become a monstrous conglomerate of tax breaks, incentives, loopholes, and political favors brokered by lobbyists and granted by politicians.

Everyone wants a favor or a tax break...and, if politicians can grant favors for votes, they will.

Rule #1      NO TAX BREAKS, NO EXEMPTIONS, NO DEDUCTIONS, NOTHING!!!

Rule #2      Lower incomes pay lower income tax rates.  Maximum income tax rate for
                  individuals is 10%.

Rule #3      All income tax brackets adjusted for inflation every year.

Rule #4      Income tax rate applies to all income, salaries, interest, capital gains,
                  social security, proceeds from home sales, company car allowances, etc.
                  No exceptions!

Rule #5      Income tax rates appy to each individual that earns income,
                  no joint incomes.

Rule #6      Save 10% of all taxes collected the first 5 years to fund a 50% rainy day
                  reserve fund, to cover emergencies such as paying off debt, financing a
                  war, or disaster relief.  Unused funds in the reserve could be loaned to
                  banks at a low interest rate to fund safe, well-qualified, home and
                  business loans.  Once the rainy day reserve is fully funded, politicians
                  can spend all of the income tax collected (less replenishment of any
                  rainy day funds spent the prior year).

One purpose of this tax program is to prevent politicians from abusing the tax system to reward benefactors and punish opponents.  Another purpose to to provide a simple, predictable, and direct method of taxation that is easy to understand and to forecast, and which would require politicians to budget their expenditures to their available income.

In case of emergency, politicians could raise tax rates only for stated, specific purposes, and only if the rainy day fund did not cover the emergency.  All increases in tax rates would have to be voted in by a 60% majority and  re-approved every two years.

 Now that the overview is done, let's go on to more specific details.