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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.
The only reform in play is Rep. Camp's desire to eliminate sufficient tax expenditures to enable the top individual and corporate tax rates to be reduced to 25%. This will enable successful investors and corporations to become even more profitable without any risk, without growing the economy and without creating a single new job. Only a broad expansion of the tax base can eliminate the job killing payroll taxes and produce the lowest rates such as a revenue neutral tax of 2% net wealth (excluding $15,000 and $500,000 retirement funds), 4% VAT and 8% income.
The tax code has redistributed wealth to the top with $1.2 trillion in annual tax expenditures that mostly help people that really don't need the money. Between 1995 and 2010 only the top 10% gained wealth and the bottom 50% of the population lost so much that they have only $3 today for every $10 they had in 1995. We need a re-redistribution of wealth. The tax code needs to include net wealth as an adjustment to income tax liability. A 2% net wealth tax could replace the regressive, job killing payroll taxes. More at TaxNetWealth.com
The Tea Party sympathizers oppose all tax expenditures - at least in theory; and the Democrats should use this as the key to reform. The annual $1.2 trillion tax expenditure hurts both the economy and the budget. Most well intentioned reformers advocate reducing the size of this tumor but cannot agree on where to cut. It takes a statesman and a patriot to say the tumor can and indeed must be completely removed. A "revenue neutral" blend of a net wealth tax (2%) value added tax (4%) and flat income tax (8%) creates rates so low that no tax expenditures can be justified. See TaxNetWealth.com
No one is suggesting that wealth be confiscated by the government but I strongly support a “revenue neutral” 2% tax on net wealth (excluding $15,000 cash and tax exempt retirement funds). Because the tax would be “revenue neutral” the job killing payroll taxes and reinvestment slowing capital gains taxes could be eliminated. The income tax could also be lowered to 8% for all. Now I invite readers to predict what the above tax law changes would do for business investment, job creation, tax fairness and wealth redistribution. You can find long answers about the 2-4-8 Tax Blend at TaxNetWealth.com.
Without raising any more in taxes we can replace job killing payroll taxes with a 2% net wealth tax (excluding $15,000 and retirement funds) and lower the individual income tax rate to 8%. Capital gains, estate and gift taxes are unnecessary with a wealth tax. A 4% value added tax (VAT) and 8% corporate rate would complete the essential elements of the 2-4-8 Tax Blend. Instead of slowing the economy with higher taxes and hurting people with less benefits, every aspect of the 2-4-8 Tax Blend encourages private job creation without more taxes or more government spending. The net wealth tax is a healthy negative reinforcer (as in "use it or lose it") in so far as it encourages assets to be used for productive investment.
The Wealth Gap is the Problem In 1995 the top 10% of the country had 67.8% of the country’s wealth while the bottom 50% shared only 3.6% ($1,912 billion). The bottom share eroded to 2.5% and tumbled to 1.1% in 2010 ($584 billion) – (a 70% loss of $1,333 billion) while the top 10% gained $3,558 billion (six times the amount owned by the bottom half of the country). A wealth distribution of this extreme has not been seen in the U.S. since the Great Depression of 1929 (when unemployment was also as bad). Congress needs to replace payroll taxes with a 2% net wealth tax. Read more at www.TaxNetWealth.com
"Republicans and Democrats ... all agree that a government ... [does] ... use taxes to discourage ... [and encourage] ... certain behaviors. Better taxes: Individuals - If we taxed individual income at 8% and individual net wealth at 2% (over $15,000 and excluding retirement funds) we could replace all current federal revenue and eliminate regressive payroll taxes. Economic mobility would be created by keeping 92% of income. Business - An 8% corporate income tax and 4% and business value added tax (VAT) could bring in an extra 0.5 trillion (with rates lower than all major competitors). www.TaxNetWealth.com
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