Coyote Blog

well, if you are looking to avoid double taxation, then taking out cap gains makes sense too.

the money you use to get cap gains (investment) has already been taxed as well for any individual.

this is a cleaner solution than eliminating corporate tax, especially as if corp tax went away, i'd immediately incorporate and use that corporation to shield all my income and to pay my bills. as a conglomerate home and car rental company with a financial advisory arm, i could bury damn near everyhting.

eliminating cap gains would encourage investment and not create such intense incentives to game the system.

I favor eliminating the corporate income tax. The corporate income tax is actually an exist tax. So, lets replace it with a true excise tax. Instead of a corporate income tax, lets have a national sales tax of 6-9%. The revenues from this tax can be used to offset individual income taxes and make those rates lower.

A sales tax is efficient and collected right from the start. There are no loopholes. There are no givebacks. They cannot move the profits offshore so they cannot be taxed. Since there would be almost no tax accounting and businesses would not have to create imaginative and often inefficient ways to avoid taxes, consumers would probably see lower costs over the long run from these efficiencies.

A sales tax would indeed be the perfect Single Tax if it weren't so simple to evade.

Here are changes I'd make to the income tax, to make it as progressive as it says it is:

1) Increase the personal exemption by a factor of ten, so that most people won't have to pay or file the tax at all, as was true (and promised forever) when the income tax was first enacted.

2) Taxing capital gains at the same rate as ordinary income would be great as long as they first allow taxpayers to inflation-index the basis of all long-term investments, so that we only pay tax on real gains (not on inflation as we do now).

3) The mortgage deduction should not only go away, but the law should recognize that all personal-use real estate is intended as an investment as well as for personal use (so you would get taxed on real gains, but be able to deduct real losses, when you sell a home). These breaks for homeowners are the biggest subsidy from the poor to the rich in the system as it is.

4) I would get rid of all payroll taxes and pay for those programs (Social Security, Medicare, and unemployment) out of the regular income tax. This achieves two important ends: it means working people so poor they don't owe regular income tax won't have to pay those either, and it makes all those taxes VISIBLE so people will make better informed choices on election day.

5) Either make child support deductible, or give the payer the child's exemption and the child tax credit.

And 6) Eliminate the "floor" amounts (Schedule A, lines 4 and 24) so all expenses of those types are deductible.

Never happen as the Congress Critters need a tax code to manipulate to keep campaign bribes coming.

>>>> At least some on the Left might be open to the idea.

Yeah, that one would go over well. I can't see the media letting it get by as ANYTHING but a chance to jump on the Right and the GOP (regardless of sponsorship) wanting to "let rich people off the hook" and wanting to "let corporations avoid taxes".

Come on, regardless of how rational, reasonable, or sensible it is, the propaganda value to the OWS mindset would be beyond belief, and they, with media help, could distort the reasoning and purpose to some pro-greed mentality that would be able to fool all too many "average joes".

This dog don't hunt, even though it should.

There is one good feature of corporate income tax: it acts as a flat tax on consumers. It's ironic that the left loves corporate taxes but hates the idea of a flat tax, so this is about the only way to sneak in a consumption tax.

I don't disagree, but the proposal doesn't nearly go far enough: abolish all taxes. Replace them with either a low transaction or a low property tax or a bidding system.

All of these come with some issues - transaction taxes depend on the transaction being fairly valued in monetary terms (if I exchange my skills for your sheep, we can avoid taxation; if my parents sell me their house for $1, I am probably not paying my fair share); property taxes depend on valuation and can force sales of property associated with the individuation of the taxed (say you're out of luck and the property for your family seat ends up assessed at $10 more than you can afford); a bidding system (if you vote for me, you have to pay $N in taxes into the pool the elected representatives get to use until next election) has issues with political influence.

None of the above, though, would be worse than the current system.

Guys, if you're going for pie-in-the-sky overhaul, let's START with GAAP. That governments at ALL levels are not required to adhere to GAAP is just patently ridiculous and the source of all manner of chicanery -- state, local, AND federal. Clinton's "surplus" was exactly this sort of garbage that GAAP would have denied. The infamous sale by NY State of Attica Prison to itself was a similar bogosity. There's simply no reason governments don't have to adhere to actual legitimate accounting practices all around.

Inflation is a multiple taxation though.
Every year you get a 2%-4% tax on money you paid
tax, i.e inflation last year.

So the most "unjust" tax is inflation.

Any support from the left is simply a lever to win support for an increase on capital gains. When has the left ever lived up to a bargain? Look and the Reagan and O'neill "bargains".

But think of all the tax lawyers who would be put out of work by your proposal! The horror!