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An optional net wealth tax would work well for America. Consider an option to pay a 2% net wealth tax (excluding $15,000 cash and $500,000 retirement savings) combined with an 8% income tax and no payroll, capital gains, inheritance or gift taxes. It would leave more money for most taxpayers. Nevertheless even the very rich could be allowed to pay a flat 26% of gross income (and make up any shortfall with estate taxes later). Complementary business tax reform would consist of an 8% C corporation rate combined with a 4% VAT. Allowing workers and families to accumulate more wealth and increase disposable income should be the long range focus. The wealthy will do just fine with a growing economy.
If all can agree that full employment is the best medicine because it is associated with both robust profits and paychecks why not encourage full employment. On March 13, 2014 Bill Gates told the good conservative folks at AEI that eliminating the payroll taxes was the way to get there. While AEI President, Arthur C. Brooks suggested some type of a sales or consumption tax as a payroll tax replacement, a value added tax (VAT) is considered the fairest business tax worldwide. In fact, the U.S. is the only developed country without a VAT. Even a net wealth tax, like a VAT, would shift the worker retirement costs (Social Security and Medicare) from the workers to the business owners where these costs belong.
The poorer half of the U.S. population gradually lost 70% of their net wealth since 1995. Most of this group is bankrupt in the technical sense of having debts greater than their assets. The manage with low paying jobs and food stamps. The middle class lost 8% of their net wealth since 1995. All growth in the share of net wealth was confined to the top 10% thanks to our tax code. Tax reform needs to restore the family wealth and family values that has been lost.
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