Saturday, October 6, 2012

Tax Flashback

I was going back through some of my old files and I found a document that I labelled "Taxes" - I opened it up to find some notes that I jotted down in 2008 on how to improve the taxation system. I was absolutely stunned to find how relevant they are today:

(Revenue Decreasing)
  • Remove Payroll Tax for Individuals and Business
  • Double Standard Deduction on Income Taxes 
(Revenue Increasing)
  • Millionaire’s Tax Bracket on Income 
  • Cap Deductions
  • Increase Pollution taxes (including greenhouse gases) over time 
  • Progressive Sales Tax 
Payroll Taxes -  The Stimulus package cut payroll taxes on individuals by a third, which increased take home pay by 2%. The 2010 Tax Deal continued it. There were discussions to switch it from the individual side to the employer side because economists showed that it would create more jobs. It is due to expire in December with little hope of renewal outside of a larger agreement. (I am a strong opponent of payroll taxes. It's a tax that taxes jobs and is very regressive. I believe they should be abolished.)

Standard Deduction - Discussed as a way to great  way to simplify the tax code by making itemizing deductions unnecessary.  Also included as as alternative to limiting deductions.

Millionaire's income tax bracket - Became a democratic talking point for a few months that was called the Buffet Rule, but quickly died out. The health care law does charge an additional capital gains tax on super high income earners, so the progressiveness did become law.

Cap Deductions - Floated around the blogo-sphere for a couple days, and then Romney jumped on it before partisanship took over. It is now central to his platform and his considered his Big Idea.

Increase Pollution taxes - A carbon tax has been floated many, many times before. I can't say this was an original idea in the least. Republicans are now starting to support it too. Not because they want to tax carbon, but simply because they want to tax everything else even less.

Progressive Sales Tax - This is my one idea that has not been publicly discussed in the last few years. The basic idea is to create a federal sales tax on all consumer goods that cost greater that a thousand dollars (Say 1%) and then a second bracket on everything over ten thousand dollars (an additional 1%). A low income family would next to never get hit by this tax, a  middle income family will only pay this tax a handful of times, but a rich family would pay it often.

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