Thursday, July 17, 2008

Taxation without presentation

By Carl

Let's talk about money for a moment.

A government is reliant on money. This generally comes in the form of taxes of some sort.

So taxes are a necessity, a necessary evil.

There's a fairly comprehensive, if anecdotal, body of evidence that suggests our current income tax system is not only ineffective, but possibly illegal.

your NotPresident, I have a simple yet elegant solution, one that will lower taxes for most of us, yet re0jigger the tax liability so that it is more equitably distributed amongst the people who most benefit from our nation's freedoms.

After all, they have more freedoms than you or I. Look at how OJ Simpson got off!

Income is easy to tax and even easier to account for: you get a check, it gets deducted ahead of time, if you earn a salary. But that's not the problem. The problem comes from all those non-wage earnings: dividends, sales proceeds, and so on.

The disincentive of an income tax is to avoid spending money until after you've settled your debt to society. Withholdings make this bit easy, but the first time you get a lump sum from, say, the sale of a stock, you are clueless as to what to do regarding your taxes.

My tax system would avoid all this. Rather than focus on income, I would focus on wealth.

You are free to earn as much money as you can, legally, illegally, I don't care. What I DO care about is how much you keep out of the economy. And there's the difference.

Simply put, I would tax any investment that, in turn, did not create more income. No more tax shelters. No more idle rich sitting on their arses, collecting dividend checks. No more squirreling away money that you earned on the backs of the working and middle classes so that your kids can go to Choate and Harvard.

It's really very simple: the incentive in this tax system is to spend money, actual cash money, and the more you can afford, the more you should spend.

Naturally, there will be some baseline "minimum wealth" figure under which no one would be taxed. It's not fair, for example, to tax someone who owns a $100,000 home for four people, struggling by on an income of $30,000. I'd have to run the numbers a bit, but my suspicion is I would exempt anyone who owns less than $500,000 in assets.

Net of a home mortgage, to boot.

Eveerything else above that is fair game, and yes, I would tax your retirement savings. But notice something: every dollar you draw down after retirement is 100% tax free.

The tax rates would be graduated. It's not fair to ask someone who owns, say, $500,001 to pay the same rate of tax as someone who owns 500,000,001. If your hogging your wealth, you're going to get hit with a penalty, a big penalty.

Admittedly, this plan would need a lot of fleshing out (actually, it's already been fleshed out, but after Senator McCain stole my idea for a
cash prize for alternative energy, I'm laying just enough cards on the table to show my hand without putting my chips in completely.

You want it, Barack? John? Come buy it off me!

I even promise to spend the check!

(Cross-posted to
Simply Left Behind.)

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