In the course of reading an article questioning whether we should tax the rich, I saw that the author provided a link to a blog article which included some really interesting tax ideas. Although it was originally written in 2002, I still found it interesting enough to share. Below are the key points, but I highly encourage you to click on the link at the bottom and read the rest of the article. Come back here when you are done and post your comments and thoughts.
The Jane Galt Tax Plan
Fritz Schrank asks how we should simplify taxes. Well, here’s the Jane Galt version, guaranteed to please no one but its author:
1) Get rid of all our poverty programs, except those aimed at the disabled, and temporary unemployment assistance, and institute the negative income tax. That is to say, the system should be continuously progressive, from a steep negative rate of up to 100% on very low earners, gradually declining until it zeroes out around $28,000 a year, and then rising gradually until it maxes out around 35% on the top brackets.
2) Eliminate FICA and pay for Social Security and Medicare out of general revenue. It’s time to stop pretending it’s a pension system, when there are no assets in the “trust fund”
3) Eliminate the corporate income tax
4) Eliminate the special treatment for capital gains. All income should be taxed at the same level, regardless of its source.
5) Eliminate all deductions. Period, end of statement. No mortgate, student, child, etc. All causes are equally worthy in the eyes of the person who possesses the deduction; it is a waste of our time as a nation to sit around arguing about who deserves what.
6) Just say no to the Value Added Tax. In theory, it’s a good tax. In practice, because it is extremely hard to tell what proportion of the price of anything represents the tax, it removes the good and natural pressure upon tax rates.
7) Get rid of the estate tax, and tax the capital gains on whatever is sold.
So why these particular features?
Well, the negative income tax does two things: encourages work by removing the disincentives created by potential loss of benefits; and means that the entire country, poorest to richest, faces a marginal tax increase if they want more spending: the poor have to give back some of their rebate, while the rich have to pay higher rates. For many on the left, that may of course be a bug, not a feature, as it forces the electorate to think much harder about whether or not they want new spending.
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