I have a pretty complex tax reform, but one that might work [View all]

[jmowreader]

Any workable tax reform plan has to meet two seemingly contradictory goals:

Goal 1: It has to increase revenues to the federal government
Goal 2: It can't leave the poor any more fucked than they already are. It should, ideally, leave them less fucked.

No tax plan extended by the Republicans meets either goal; most of them meet neither. The perfect GOP plan would be to exempt anyone who makes over $1 million per year from taxation of any kind, eliminate all social programs and dump the entire tax burden on the shoulders of the middle class. They'll never get there but they can dream.

Here is my plan. Read the whole thing before telling me how full of shit I am, please.

1. ALL income will be subject to Social Security tax at its current rate. The "let's raise/eliminate the cap but lower the rate" thing a lot of people fall into is a form of revenue neutrality - a process through which we try to make sure a new tax rate collects exactly the same amount of money as the old one did. Now hold on there Hoss: Social Security's problem isn't that every dollar earned in America isn't evenly levied for Social Security but that there's not enough money coming in. If we eliminate the cap but leave the rate the hell alone, more money will come in and that is the desired result.

2. Tax rates must go up. Simple as that. The new rates will be:

10% becomes 11%
15% becomes 17%
25% becomes 28%
28% becomes 32%
33% becomes 38%
35% becomes 41%
39.6% becomes 50%

3. The beginning and ending points of each bracket will be even numbers in $5000 increments - rather than a bracket running from $148,851 to $226,850, that bracket will run from $150,001 to $225,000. This one is not for changing the amount of taxes we'll collect, but to make it easier for the taxpayer to figure out how much tax he owes.

4. The standard deduction will be increased to 125 percent of the federal poverty level for your family size (FPLF) as of October 15 of the tax year. This date is to give the feds sufficient time to issue tax publications with the number in them because you can't print fifty million of ANYTHING, especially if it has to be proofread by lawyers, and ship it all across the country in two weeks.

5. Allow anyone in the current 10 or 15 percent tax brackets to take both standard and itemized deductions.

6. Anyone in the current 35 percent bracket must itemize, regardless of tax impact.

7. Anyone in the current 39.6 percent bracket can only deduct charitable contributions.

8. Anyone who makes over $1 million in gross income pays a flat 25 percent on 95 percent of his or her income.

9. Any business with less than $1 million in taxable profits will pay taxes using Individual tax rates, and those with more will pay Corporate rates.

10. Tax legislation may only be proposed once every 10 years.