Tuesday, January 19, 2010

Simplified progressive income tax

No tax system will ever be fair. The struggle then is to find something suitable that can be tolerated by most. The current system is the result of years of loopholes being built in to satisfy one interest group or another, and it is overly complex as a result. I have a better plan.
While not a flat tax system, my simple progressive tax plan eliminates the loopholes and is about as fair as can be done. The current books of instructions and multiple forms will be replaced with a single page form with instructions printed on the back.
My tax system would have a 10% rate for those with gross income under $100,000; 15% from there to under $250,000; 20% from there to under $500,000; 25% from there to under $1,000,000; and 33% for a million and up.
Interest, dividends, etc... would count as gross income.
Individuals would each receive a $12,000 personal deduction. Dependents would receive a $5,000 deduction.
Up to 10% of gross income could be deducted for gifts to registered charities.
Up to $10,000 could be deducted for health care costs.
Up to $2,000 could be deducted for purchase of renewable energy devices to power homes such as solar panels, windmills, etc...
No other deductions. No credits. No AMT. No complicated loopholes, schedules, or additional forms.
Under this plan, a typical family of four with annual earnings below $34,000 would pay no tax at all, the burden of taxes falling progressively more on those with more means to carry it.

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