SHAZ' 2018 LOONY TAX PLAN: details inside. No, it's not a progressive tax. Yes, it's a flat tax. And yes, it would make our tax plan super simple for +90% of Americans! Whatcha think?
Good stuff i would support if it didnt wreck the govt.
Take away all of the exemptions, deductions, credits, adjustments, and special classes of income, and we already have a dead-simple (bracketed) flat tax. Why reinvent anything?
Read the discussion between me and WV below.
People on the way up don’t have time to do what you ask, and capital gains are taxed at both short term and long term so some of the taxes are paid annually. Also 75 k makes most Americans have no skin in the game.
Do payroll taxes exist in this scenario?
Responded to that in my comment to WV below.
I’d rather have a simple flat tax. No payroll tax. All income - first 25k exempt. After that taxed at 9, 10, 12% or so. There should really be no tax credits or itemization for anything. No estate tax.
This would remove all lobbyists from influencing Washington, would be a progressive tax, and most Americans would have skin in the game.
Missed the time part: they have no fewer hours in the day than those who work 2-3 jobs. As far as straight flat tax goes, the math doesn't work until you crest 20% - way too much for a single provider household living on $35K. Most importantly though, it doesn't change anything. It only shifts how things are paid. What I am proposing actually shifts how we approach economic growth internally.
I don’t think what you proposed is necessary. It’s like conscription. But the free market would do it better.
And I think 10-12% flat tax from >25k. All income, no deductions. Will work
The goal here is to incent free market innovation. Not sure if I said it here or not, but the idea of "mega employers" is gone. There's no way the gov can give tax breaks large enough to return us to the 80s. A flat tax like you're suggesting doesn't change the economy. It only provides a way to maintain the old economy. Might slow its decline, or it might not. It definitely doesn't stop it or reverse it.
It would seem to me the rates over 75k would either have to be steep or this plan would bring in far less money. I would be fine with the latter but I don’t see many accepting this when they realize what it would do to the federal budget.
It could actually be steep, but stepped upward. I currently pay about 30% in taxes. Say it hopped up to 50% over 5 yrs and 60% over 10. it gives new firms enough time to launch, and me enough time to find some to invest in.
It's a better proposal than our current tax code which struggles with compliance costs and evasion. I have fundamental problems philosophically with income taxation, but it's still better than progressive taxation. Though again, I'd prefer it over the status quo. My only concern is the exemption for capital gains and income taxes below $75,000 rate going to be a standard deduction or will the tax on your paycheck not kick in until you earn your $75,001st dollar. Secondly, how do you track the number of hours an individual spends on helping startups? Finally, what would you be doing with the payroll or corporate taxation? Estate?
No taxes until you cross $75K, Tracking hours - no clue, but I'd most likely host a kickstarter competition. Best design gets initial contract - but if app based, would be open to added options post launch. Successful rich can donate time/$ for development of course. Estate gets tricky. I'd want to keep the $75K threshold, but that may not work. Corp tax I'd set up like personal tax: company gross revenue (not VM or MM) broken into quintiles, bottom 3 exempt. ~1/2 through 4th and above taxed. Would need to think about deductions - but probably along lines of building community infrastructure. Payroll tax: incent for every FT worker paid OVER median income (60K). The more ft high wage earners you employ, be lower your tax burden. Works two ways: increases % of $75K+ needing to give back, and increases overall median salary so increases national economic growth indicators like PPP, GDP/MHI %, etc.
The rates would need to be exceptionally high, and that produces a problem. I think you're plan is better than the current tax code, but still does have many challenges that need to be ironed out.
Maybe, but that doesn't necessarily bode bad for the majority of Americans. Let me give an example. A person makes $130K/yr right now and is taxed at 30%. Net is $91K.
Same person under what I am proposing with >$75K @ 50%: $130K-$75K = $55Kx50%=$27.5K + $75K = $102K net. So this actually reduces their tax by just over $400/paycheck.
Looking at someone who makes more than 2x that $350K
With my idea at 50% over $75K:
350-75=275x.5=137.5+75=212 or a net decrease of $33K.
But 350K=168/hr which translates to 4 hour/week working on a startup to break even, or 2 hr/week with $17K investment. If the business is profitable, that drops incredibly fast.
And again, the big upside is it drives a shift in our economy away to more small startups. We have to face that the age of mega employers (besides Walmart) are gone. This helps stimulate a shift to a different type of economy. I'm sure it has holes, but back of the envelope it is IMHO interesting.
The tax rate for both right now is 28%, but close enough.
Could you explain your payroll tax idea though? If you're replacing both the income and payroll with this i understand, but if not could you explain?
Are you talking about employee or employer payroll tax?
Employee would be completely replaced with this. Employer would have a similar incentive, but flipped. No payroll taxes for personnel paid >$75K. Below $75K would have a significant tax rate haven't done the math to say what, but comparable to the 50% workers would pay. Would have an incentivized offset though. Not sure what it would be though. Maybe community improvement like the Rockefeller center, or maybe providing internal services to startups. Covering mfg with excess plant capacity, business reviews, accounting services, or direct investment into startups etc.? Not sure exactly, but would think it'd be geared at stimulating growth in non-competitive innovation or community improvements.
For me, that's the heart of this: accept that our previous economy's foundation is gone. How do we develop a new one? Assume mega employers are not an option, and any mass scale global competition will come from micro businesses. With those, how can we use taxes to incent the change?
This i disagree with because of its effects on small businesses. They can't afford to pay workers $30,000-$45,000 more, so they'll be stuck with huge losses. Corporations can get around the edge increase by using public investments which leads to reduced revenues and further instability in the entitlement budgets.
Nope. You missed the point above. I would break firms into quintiles based on gross sales similar to how we currently do with households. Bottom 3 have no taxes. About 1/2 way through the 4th quintile is the the tax line. I didn't mention how it would work with diversified firms and conglomerates though. Not sure if it's best to view each division as an independent or the firm as a whole when calculating quintiles. My gut says the former - bc it stimulates greater local employment - but I might be swayed as a firm could just splinter to remain below the Q4 threshold.
Again, come at it from trying to build a nation economy based on micro businesses. Can't do that if the micro business is taxed like a well established highly profitable publicly traded entity. Let the funds remain within to stimulate internal investment via organic growth.
So now I'm confused, I thought the bottom three quintiles being exempt was for the corporate tax, is the payroll tax like that? And how would you ensure items like Social Security and Medicare are paid for? This seems like it would produce tremendously less revenue.
Ideally, yes. I'd need time with amounts needed, pool available, etc. and then calculate the fixed % that would cover costs at some fixed level. Would have to model tax growth from >$75K earners, and increased individual financial viability to determine national solvency. Ultimately, the goal would be to increase PPP to the point reliance on Medicare/caid and SS would be significantly reduced. Would probably be the most complex part (that and K12), but if we approach it with no sacred cows, it's probably doable. IOWs, if the goal of SS is to provide subsidized health care and material support for the elderly, disabled etc. can we achieve that end goal via community investment at a level great enough to reduce or eliminate SS?
For example: a firm's gross revenue places it in the top 1% of firms nationally. It would face a significant tax burden. What if we let that burden be offset by them partially funding the local health care infrastructure? What if we had a tax percentage reduction multiplier associated with patients served who were are elderly at no charge? What if we permitted these top 1% to combine efforts, and rewarded based on a quality of care+cost reduction metrics? What if we did something similar with K12? Or adding local senior/disabled COLA to their P/L? Something like supplementing a lower 2 quintile senior's livelihood results in a 2:1 dollar reduction to tax burden? White boarding here, but hopefully you get the idea?
Corp taxes and incenting local/national improvement via reducing them is much more complex though. My overarching goal would be to gain greater shareholder/stakeholder balance than we currently have. Maybe swing pendulum significantly back toward stakeholder.
So you support replacing Social Security with this system?
I don't know. Maybe. But it would take a lot more info to say one way or the other. Or maybe only partially or delayed for 15 yrs. It's just an example to highlight no sacred cows. Start with a change in philosophy and a clearly stated objective, put everything on the table and see where you land. Could I see SS or MC being replaced? Sure. Do I see either being touched by simply changing how the percentages line up? Not a chance.
This is going to be long! Sorry, but it's still WAY shorter than reading the GOP tax bill!!!!
How I would incorporate a Flat Tax: Households earning less than $75K/yr are exempt, and the flat tax applied to any wages earned over $75K. This means than quintiles 1-3 are exempt and the lower half of Q4 as well.
Remove the cap/gain delay, and tax gains based upon the $75K threshold, but tax separately. IOWS, if you earn $75K, your cap/gains are exempt. $100K only 25% of your CGs are eligible and so on.
Any offshore investments are taxed at the same rate. Failing to file with later discovery results in forfeiture of offshore assets and their use to fund either small business loans in the US, or local humanitarian efforts if the funds are not released back to the US. New humanitarian NFPs can apply for federal licenses to participate.
For those making over $75K/yr, the tax burden can be reduced to zero by either investing capital or time to small businesses and startups the individual maintains <10% ownership of. Any gains realized from their work or investment in these small businesses is tax exempt and doubled in overall tax calculation.
IOWs: I make $100K. I donate 10 hours or $480. My return is $1000. That means my reduction to my salary is $1,520 ($1,000x2-$480), and my new tax base is $98.3K. The more time I invest, and the more successful that business is, the lower my taxes.
Deduction based on hourly income ($100K: 1 hour donated =$48 deduction to +75K threshold as $100K/40/52=$48). $1 = $1 for capital investments, so $100K w/ $25K small business investments = no taxes.
Why this works better than the GOP plan: 1) it relieves the tax burden and more importantly Dead Weight Loss for the bulk of our populous and economy. 2) For those of you who don't know how this works, cap/gains (stocks) are taxed when they are sold. This means that someone who has a lot of money can horde their money in the stock market which effectively removes it from circulation in the economy. Removing this huge "tax haven" reduces wealth horsing and increases capital investment flowing into smaller businesses/startups. 3) ditto for offshore investments/assets.
4) this is he most important part. Most of those who have accumulated and maintain wealth needed to qualify in the top 30% have done so bc they are successful in their given field. This provides those folks the option to effectively opt out of paying taxes by transferring a portion of their income or their expertise to newly formed firms. Regardless of whether it's $ or time, the successful individual is being incented to ensure those firms win.
In the meantime, those who are driving the means of production and distribution to grow our economy have up to 33% more money to invest or spend. It's a revamp of the traditional circular model geared for a global economy.
Why Liberals should love this: it completely excludes the poor and most of the middle class.
Why Conservatives should love this: it increases the likelihood of new high wealth constituents, and provides a pathway for the wealthiest to have to literally pay no taxes.
Why Libertarians should orgasm over this: it's what you've been dreaming of. Small firms will explode and take over those aspects currently fully funded by tax dollars. @Rebelfury76 can start a small road paving firm, and provide the service at a lower cost than the city to his surrounding neighborhoods. Because he has powerhouse business people guiding him and best chemists working on his paving formulation, he can take over the state.
I would adopt this in Squidtopia if we taxed our citizens. Government is funded solely by bribes.....errr....sponsorship. My constituents happily accept the sponsorships since they pay no tax. 😄