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Eliminate capital gains all income is taxed as earned income. Eliminate all deduction except primary residence and dependents. Since all deductions are elimin

Eliminate capital gains all income is taxed as earned income. Eliminate all deduction except primary residence and dependents. Since all deductions are eliminated lower tax rate to the effective tax rate for that tax bracket. We've just closed all the loopholes, and given most people a tax break. Add two new tax brackets: >$5M with a tax of 45% >$10M with a tax of 69% (back to the good old days). This simplifies tax for everyone, gives all but the 1% a tax cut, eliminates all the loopholes, makes auditing a breeze, because it simplifies everything the size of the IRS can be reduced and their effectiveness can be increased. There are about 16,000 people in the U.S. negatively impacted by these changes. For the other 353 Million people it's a huge plus.

fatnoah 6y ago
Honestly, just set up marginal brackets with zero deductions, exemptions, etc.
malandrew 6y ago
Even simpler solution: Switch entirely to sales tax to fund everything. Whittle things down to three sales taxes: federal, state and local and the federal also gets the benefit of import taxes. If you consume more, you pay more. Everyone has skin in the game (everyone pays proportional to their consumption) and thus everyone now has a vested interest in advocating for a leaner, smarter and more efficient government that is less wasteful. A progressive income tax is actively counter-productive to getting a greater return on investment for governance. Furthermore, a progressive income tax also massively distorts the price of labor so no one paying for labor is paying the true cost of labor which should be the sum of (1) the disposable income paid to a laborer and the (2) taxes that laborer pays to the government. You're not actually making people better off with a progressive income tax because the market will just lower the amount paid to be equal to the disposable income portion.
- AnimalMuppet 6y ago
  So if I don't spend but save, there's no limits on the growth of my wealth? That's not going to be a popular option. People are concerned about wealth growing without bounds (and the growth of power that comes with it). Taxing that less is concerning in terms of the effect on social dynamics.
  - malandrew 6y ago
    > there's no limits on the growth of my wealth? The primary benefit of wealth is in liquidating it and spending on consumption. If you're growing your wealth, you're doing something good that society should want more of: investing. You can't grow wealth without reinvesting that wealth. That is what powers the economy and creates jobs and drives R&D and innovations. > People are concerned about wealth growing without bounds (and the growth of power that comes with it) The purpose of taxes is to fund the government: nothing more, nothing less. It is not the government's role nor purpose to limit wealth creation in any way shape or form. That's never been its mandate in why it collects taxes. SCOTUS even made this observation about taxes: "the power to tax involves the power to destroy." – Justice Marshall in McCulloch v. Maryland (1819) That said, government may be used to place checks on certain types of uses of power when individuals go to exercise it. While wealth may result in power, it doesn't necessarily result in uses of power that need to be checked by the government.
hnburnsy 6y ago
Somewhat agreed but the issue is that taxing away tax breaks or implementing a flat reduces Congress's power to choose winner and losers.
- colineartheta 6y ago
  OP never advocated nor mentioned a flat tax. He advocated adding two tax brackets to the progressive tax scheme we currently have.
cheph 6y ago
> Eliminate capital gains all income is taxed as earned income. I don't own property, I rent, trying to save for an apartment. I am currently paying CGT on savings (I think at income tax rate). People who do own property where I live get tax rebate because they have mortgage, and they don't pay CGT on residential property. How is that fair? I am poorer than most people who own property but paying higher effective tax rate than them, and it makes it more difficult for me to buy. How is that fair?

fatnoah 6y ago

Honestly, just set up marginal brackets with zero deductions, exemptions, etc.

malandrew 6y ago

Even simpler solution: Switch entirely to sales tax to fund everything. Whittle things down to three sales taxes: federal, state and local and the federal also gets the benefit of import taxes. If you consume more, you pay more. Everyone has skin in the game (everyone pays proportional to their consumption) and thus everyone now has a vested interest in advocating for a leaner, smarter and more efficient government that is less wasteful. A progressive income tax is actively counter-productive to getting a greater return on investment for governance. Furthermore, a progressive income tax also massively distorts the price of labor so no one paying for labor is paying the true cost of labor which should be the sum of (1) the disposable income paid to a laborer and the (2) taxes that laborer pays to the government. You're not actually making people better off with a progressive income tax because the market will just lower the amount paid to be equal to the disposable income portion.

AnimalMuppet 6y ago
So if I don't spend but save, there's no limits on the growth of my wealth? That's not going to be a popular option. People are concerned about wealth growing without bounds (and the growth of power that comes with it). Taxing that less is concerning in terms of the effect on social dynamics.
- malandrew 6y ago
  > there's no limits on the growth of my wealth? The primary benefit of wealth is in liquidating it and spending on consumption. If you're growing your wealth, you're doing something good that society should want more of: investing. You can't grow wealth without reinvesting that wealth. That is what powers the economy and creates jobs and drives R&D and innovations. > People are concerned about wealth growing without bounds (and the growth of power that comes with it) The purpose of taxes is to fund the government: nothing more, nothing less. It is not the government's role nor purpose to limit wealth creation in any way shape or form. That's never been its mandate in why it collects taxes. SCOTUS even made this observation about taxes: "the power to tax involves the power to destroy." – Justice Marshall in McCulloch v. Maryland (1819) That said, government may be used to place checks on certain types of uses of power when individuals go to exercise it. While wealth may result in power, it doesn't necessarily result in uses of power that need to be checked by the government.

hnburnsy 6y ago

Somewhat agreed but the issue is that taxing away tax breaks or implementing a flat reduces Congress's power to choose winner and losers.

colineartheta 6y ago
OP never advocated nor mentioned a flat tax. He advocated adding two tax brackets to the progressive tax scheme we currently have.

cheph 6y ago

> Eliminate capital gains all income is taxed as earned income. I don't own property, I rent, trying to save for an apartment. I am currently paying CGT on savings (I think at income tax rate). People who do own property where I live get tax rebate because they have mortgage, and they don't pay CGT on residential property. How is that fair? I am poorer than most people who own property but paying higher effective tax rate than them, and it makes it more difficult for me to buy. How is that fair?