Like Handy Manny, We Bust Out the Tool Box, And Start Working On America's Home Improvement Projects....
We've said before that one thing we admire about Paul Ryan is that he isn't afraid to put a plan out there. Maybe they're not all the greatest plans, but the important thing is they are a starting point. Without putting something out there, Congress doesn't have that starting point. Taxation is something we have spent years working on, trying to figure an equitable, fair and most importantly, realistic plan. I've listened to all the voices, and taken those things into consideration, which seems to be more than Congress has. While there is no magic bullet, here are my opinions of taxes, and what I think is the best plan forward for America - it's businesses and ALL of it's citizens...
What Works and What Doesn't
First, you always have to start off with what is currently being used. If our current system were good, we wouldn't be trying to fix it , would we? That is the primary problem - every year, we add more and more to the tax code. It's great for accountants and tax attorneys, but when a system gets to be over 1600 pages long, it's a mess. Congress IS picking winners and loser with every change and addition. Milllionaires paying less than me is rdiiculous - and that did happen this year..Meanwhile, close to half of all Americans pay NO taxes at all. A system filled with inequities essentially squeezes the Middle Class, and is a mjor cause of why the economy hasn't picked up faster. Say what you want - but the truth is the econ omy picks up when more products are sold, not when a millionaire has more cash in the bank..
I won't go too much into the FairTax again, because anyone who's ever read this blog knows that we are NOT proponents of it. It's inequitable, and it's based on consumption, not on the true ability of a person to pay taxes - their income. We've been listening to them for years, and it's still constantly under revision. We've given up on the FairTax people trying to pound a square peg through a round hole, while making assinine proposals like 'Prebates'. The FairTax was undoubtedly the brainchild of some millionaire who managed to bullshit people who weren't fully listening...
Now, we had started out with the thought of a Flat Income Tax. Of the three, it is the most fair, because everyone pays the same rate based on their income. On the surface, it sounds great, but the problem with a Flat Tax is the rate is virtually impossible to set. Why? For example, lets say you put the rate at 14%, like Steve Forbes wanted when he ran in 1996... It's not terrible for middle or lower class, but it's a bonanza for the wealthy. Taxing the rich at 14% will not sufficiently fund the government. Put the rate higher, and the lower and middle class get slaughtered.
Deductions are just like the rest of the tax code - they pick winners and losers. The incorrect part is that few people do these certain actions in order for a deduction. Why? Because it's not worth it.. Do we buy a house for the mortgage deduction, or a Prius for the credit, or send our kids to college to get a 15% credit on it? Absolutely not. It's sad to say, but the only thing that people do for a tax deduction is donate to charity. We're not up for bankrupting every good charity in America (although if we weren't taxed to death, we'd have more money to donate), so it'd be a good idea to leave a little room for them. To us, there is only one good exemption - the single standard exemption.
So, that's all of our problems with the Tax Code... But, at SC6, we don't just bitch about everything - we try to fix them. So, without further adieu, we give you the SC6 Tax Plan...
Four Tier Income Tax
Rather than a Flat Tax, we're proposing four levels to accomodate the four levels of society: Lower Class, Middle Class, Upper Middle Class and Upper Class. Here are the four rates:
12% Rate up to $50,000 annually
17% Rate from $50001-100000 annually
22% Rate from $100001-250,000 annually.
30% Rate above $250,001
22% for Capital Gains Tax
0% For Estate Taxes
Standard deduction of $10,000 per filer, including capital gains.
Charitable deductions allowed, capped at 5% of total income.
That's it. What we were shooting for was setting a plan where everyone contributes even a little bit. The exception to that would be the $10,000 exemption. Why? A couple reasons.. First, if you're pulling in less than $200 per week, you need every penny you can! After that, you're paying something, but not a ton. Another winner from the deductions is the two earner family.. By filing separately - because there is no incentive to file together - they earn two exemptions. So the college , mortgage , EITC and other bullshit is incorporated into it, without making rules to pay favorites.
The rates for all are lower, but with the loss of exemptions, it should counteract that. The Upper Rate is dropped from 35% to 30%, which is higher than the lower level, but each group can drop it by 5 points with charitable donations... Capital Gains are treated similarly to income, with exempting the first $10,000 for ordinary people cashing in 401k's and stock...
The main focus of it is to make a Tax Plan that is simpler, fair and realistic, and we think we are very close. I know the one complaint is I've heard from FairTax people is it makes illegal workers pay tax too. True, but I'm not in favor of screwing 180 million taxpayers to catch 11 million in the net too. It's like ObamaCare - lots of bad things happen when you try too hard to make the net catch everybody..
Feed back would be nice, as with any proposal we make. We are compromisers, and the worst that could happen is we get a good suggestion. Our track record on things like this is pretty solid. In 2004,we pitched tax credits for new hires, and soon after we passed it to him, Mark Sanford sent it to Columbia. Barack Obama is now proposign a similar plan, so we must have been on the right track. We think we're on another one here as well. All over the place, I hear Democrats say they are not opposed at all to a Flat Income Tax. If they like that, they should love this. All it needs is the CBO to confirm f the rates are correct, or if it needs tweaking to be on target...