Every responsible American Citizen knows that the United States federal government spends too much money and has a tax system that is out of control. Any rational person knows that before you can develop a spending plan to pay your bills, you have to know what your revenue is going to be. Except of course in Washington D.C. where somehow the Republicans in Congress have convinced Americans through the media that the opposite is true. Republicans said they needed to pass a budget first – a.k.a. spending plan – which they did last week before telling us the details of their major tax reform plan. That should be a big red flag for everyone to expect business as usual in Washington Establishment Heaven after the GOP makes its announcement tomorrow.
The U.S. “Business and People” Tax Reform Proposal
Our current tax system is complex and incentivizes powerful special interest groups. The U.S. tax system today funds a government that is out of control. Republicans in the U.S. House of Representatives say they will release their new tax plan to the public this week. The House Ways and Means Committee is slated to release its tax bill on Wednesday and then the games begin.
Like it or not, the window is closing to fix the fiscal troubles in the United States. American Citizens have one opportunity now to point the nation in a better direction by first reforming the tax system and then fixing government spending that is spiraling out of control.
Here is a bold tax reform proposal – simplified – that keeps the current progressive system of taxation that politicians want and enriches all lower and middle income working families and small businesses. This proposal improves business investment, strengthens Social Security, incentivizes retirement savings and will trigger massive economic growth while supporting better government oversight and reform by improving Whistle-blower protections.
Tax Simplification
- two filing statuses -businesses and people- for all income, dividends, rents and capital gains.
- two filing options for people – individual (I) / family (F).
- eliminate all federal tax deductions and incentives and penalties for businesses and people.
- eliminate all federal inheritance taxes for people.
- eliminate the IRS and automate all business and people tax collection requirements.
- modernize compliance methods and penalties for tax evasion and fraud.
For businesses, permanently enact the following:
- eliminate all federal taxes for the first $25,000 of business income, dividends, rents and capital gains.
- reduce the top federal ‘business tax’ rate to 15 percent of total earnings over a billion dollars. Bracket business income to incentivize small business formation and entrepreneurship by not taxing the first $50,000 of earnings.
- allow the depreciation of all business capital expenditures in the year in which they occur.
- eliminate all federal government ‘incentives’ and special interest tax ‘breaks’ and leave those options to the states to implement as a tool to compete for businesses. In other words, eliminate all business central planning in Washington D.C. and allow the states to offer incentives – not politicians in Washington D.C. The federal tax system should be an equal opportunity playing field for businesses while funding our nation’s needs.
- eliminate the national minimum wage.
- eliminate the National Labor Relations Board (NLRB).
- make other adjustments as needed to implement this framework.
For people, permanently enact the following:
Individual Brackets
- eliminate all federal taxes for the first $25,000 (I) / $50,000 (F) of income, dividends, rents and capital gains.
- tax at 15 percent income, dividends, rents and capital gains over $25,000 (I) / $50,000 (F).
- tax at 20 percent income, dividends, rents and capital gains over $50,000 (I) / $100,000 (F).
- tax at 30 percent income, dividends, rents and capital gains over $100,000 (I) /$200,000 (F).
- tax at 35 percent income, dividends, rents and capital gains over $200,000 (I) /$400,000 (F).
- index all tax brackets for inflation every two years.
Social Security / Medicare
- eliminate the taxable earnings cap for Social Security to apply the same tax treatment to Social Security that now applies to Medicare.
- exclude all dividends, rents and capital gains from Social Security and Medicare taxes.
- keep the earnings caps for calculation of Social Security benefits.
- exclude all social security retirement pensions from federal taxes.
- automatically calculate and adjust Social Security COLAs every two years on anniversaries of start date vs. annually.
Retirement Savings
- eliminate all tax penalties for early withdrawals of retirement savings accounts (IRA’s, 401k’s, etc).
- tax early withdrawal amounts from retirement savings accounts as income, dividends, rents and capital gains in the year in which a withdrawal is made.
- eliminate all taxes on withdrawals from all retirement and other savings or investment accounts after full current social security eligibility – currently 67 years old – begins.
- make other adjustments as needed to implement this framework.
Government Accountability and Reform
Exclude from taxation all money spent by individuals for legal fees and medical expenses incurred after disclosing information which the employee reasonably believes evidences a violation of any law, rule, or regulation; or gross mismanagement, a gross waste of funds, or an abuse of authority, if such disclosure by the employee is not specifically prohibited by law and if such information is not specifically required by Executive order to be kept secret in the interest of national defense or the conduct of foreign affairs. Also, eliminate from federal taxation the sum of any monies received by individuals who blow the whistle for back pay, compensatory and punitive damages.
Examples:
All business and individuals will pay flat rate taxes for Social Security, Medicare and pay all applicable State and Local Taxes in addition to federal taxes.
For annual federal taxes:
Business income, dividends, rents and capital gains = $25,000 = $0 in federal taxes (0%)
Individual income, dividends, rents and capital gains = $25,000 = $0 in federal taxes (0%)
Family income, dividends, rents and capital gains = $50,000 = $0 in federal taxes (0%)
Business income, dividends, rents and capital gains = $50,000 = $3,750 in federal taxes (7.5%)
Individual income, dividends, rents and capital gains = $50,000 = $3,750 in federal taxes (7.5%)
Family income, dividends, rents and capital gains = $100,000 = $7,500 in federal taxes (7.5%)
Business income, dividends, rents and capital gains = $100,000 = $11,250 in federal taxes (11.25%)
Individual income, dividends, rents and capital gains = $100,000 = $13,750 in federal taxes (13.75%)
Family income, dividends, rents and capital gains = $200,000 = $27,500 in federal taxes (13.75%)
Business income, dividends, rents and capital gains = $200,000 = $26,250 in federal taxes (13.125%)
Individual income, dividends, rents and capital gains = $200,000 = $43,750 in federal taxes (21.875%)
Family income, dividends, rents and capital gains = $400,000 = $87,500 in federal taxes (21.875%)
Business income, dividends, rents and capital gains = $400,000 = $56,250 in federal taxes (14.06%)
Individual income, dividends, rents and capital gains = $400,000 = $113,750 in federal taxes (28.44%)
Family income, dividends, rents and capital gains = $800,000 = $227,500 in federal taxes (28.44%)
Business income, dividends, rents and capital gains = $1,000,000 = $146,250 in federal taxes (14.625%)
Business income, dividends, rents and capital gains = $5,000,000 = $746,250 in federal taxes (14.925%)
Business income, dividends, rents and capital gains = $10,000,000 = $1,496,250 in federal taxes (14.9625%)
Business income, dividends, rents and capital gains = $20,000,000 = $2,992,500 in federal taxes (14.9625%)
Business income, dividends, rents and capital gains = $1,000,000,001 = $150,000,000 in federal taxes (15%)
This plan will significantly strengthen financial security for our poor, middle class and retirees while incentivizing businesses to hire and pay people more. It is just an idea, but I think it can serve as a point of reference from which “We The People” need to start engaging each other and our politicians in Washington D.C.
Now, for the rest of you who may disagree with this plan for no other reason than because you are one of our “special citizens,” you may return to kneeling during the national anthem and screaming helplessly at the sky. This is a conversation for adult Citizens who want to solve real problems in our world. It is not a discussion about made up problems that politicians and celebrities alike have brainwashed you into believing while wearing your tin foil mainstream media-reception hat and staring at your phones.
For the rest of us, I think we need to stop waiting for politicians in Washington to tell us what they are going to do, and we need to start telling them what they need to do. Republicans had eight years to come up with a tax proposal and just like health care, we’re still waiting for them to tell us what it is. The Democrats – who are just haters – have no plan. They never have, and probably never will.
Capitol Hellway Media Company
A Free Media Company in Naples Florida
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