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Blow Up the Tax Code and Start Over


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https://www.randpaul.com/rand-pauls-fair-and-flat-tax-op-ed

 

I like his plan; it would help simplify a tax code that cost hundred of billions to comply with and he proposes to do it with previously proposed budget cuts. 

 

 

From article:

 

My tax plan would blow up the tax code and start over. In consultation with some of the top tax experts in the country, including the Heritage Foundation’s Stephen Moore, former presidential candidate Steve Forbes and Reagan economist Arthur Laffer, I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated. The first $50,000 of income for a family of four would not be taxed. For low-income working families, the plan would retain the earned-income tax credit.

 

I would also apply this uniform 14.5% business-activity tax on all companies—down from as high as nearly 40% for small businesses and 35% for corporations. This tax would be levied on revenues minus allowable expenses, such as the purchase of parts, computers and office equipment. All capital purchases would be immediately expensed, ending complicated depreciation schedules.

 

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It will never happen as long as we have special interest groups. First folks will say, I have a large family and I need a break.  Then the Realtors will want a break for someone buying a home. and so on and then we are back where we started.

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1.

I would eliminate nearly every special-interest loophole.

Why nearly every? Why not every?

 

2. Eliminate gift and estate taxes aka promote dynastic wealth.

 

3. Eliminate payroll taxes aka get rid of Social Security and Medicare.

 

4. He calls the IRS "a rogue agency"

 

5. Forbes is a tax expert?

 

Thanks for the hilarious article. There is zero actual thought to if we do X what happens next. Just republican/tea party vote bank politics.

 

How about this option. The government provides healthcare to everyone and Social Security to all above 65? No income tax or corporate tax. Basic necessities are not taxed and there is a 30% (or whatever percentage is needed to balance the budget + pay down the defecit) VAT on everything that is not a basic need.

 

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How about this option. The government provides healthcare to everyone and Social Security to all above 65? No income tax or corporate tax. Basic necessities are not taxed and there is a 30% (or whatever percentage is needed to balance the budget) VAT on everything that is not a basic need.

 

I've always liked consumption taxes.  If I want a giant boat or sports car I pay a lot of taxes for it, but if I just want to live simply I'm not paying as much in taxes.

 

A theory of mine has been a tax system where capital gains and dividends are taxed at 0%, but incomes are taxed progressively.  In theory it would create the incentive for company managers to own stock and pay dividends vs just pigging out on a fat salary.  At least with dividends shareholders would benefit as well.  You could probably set the threshold fairly high and it would only catch executives, lawyers, orthopedic and plastic surgeons.

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2. Eliminate gift and estate taxes aka promote dynastic wealth.

 

Was there dynastic wealth before the gift and estate taxes were created?  Or did they solve a problem that only exists in the imagination?

 

http://www.forbes.com/sites/phildemuth/2014/07/07/the-family-is-a-machine-for-destroying-wealth/

 

I think about this a lot. I'm in a position that, although not obscenely wealthy at this point, I will be so with even a high single digit compounding rate. I suspect it's possible to instill the sort of mindset to ensure wealth transcends generations. The odds are against me in the same sense that the odds are against most investors for beating the market.

 

It's not impossible, just difficult.

 

My current thoughts are to create a sort of intrafamily educational program. Basically, educate any heirs I eventually have myself from kindergarten through highschool, focusing on wealth creation and preservation. It may not work, but it's my best idea so far.

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2. Eliminate gift and estate taxes aka promote dynastic wealth.

 

Was there dynastic wealth before the gift and estate taxes were created?  Or did they solve a problem that only exists in the imagination?

 

http://www.forbes.com/sites/phildemuth/2014/07/07/the-family-is-a-machine-for-destroying-wealth/

 

Ah an article from Forbes magazine about no dynastic wealth. Wasn't the magazine started by the current Forbes' grandfather about 100 years ago.

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https://www.randpaul.com/rand-pauls-fair-and-flat-tax-op-ed

 

I like his plan; it would help simplify a tax code that cost hundred of billions to comply with and he proposes to do it with previously proposed budget cuts. 

 

 

From article:

 

My tax plan would blow up the tax code and start over. In consultation with some of the top tax experts in the country, including the Heritage Foundation’s Stephen Moore, former presidential candidate Steve Forbes and Reagan economist Arthur Laffer, I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated. The first $50,000 of income for a family of four would not be taxed. For low-income working families, the plan would retain the earned-income tax credit.

 

I would also apply this uniform 14.5% business-activity tax on all companies—down from as high as nearly 40% for small businesses and 35% for corporations. This tax would be levied on revenues minus allowable expenses, such as the purchase of parts, computers and office equipment. All capital purchases would be immediately expensed, ending complicated depreciation schedules.

 

 

How can anyone look at the current tax code and the enormous number of man-hours american citizens and corporations waste complying with it and not think that something drastic needs to be done?

 

Rand Paul isn't even half the Libertarian his father is, but in many areas I agree with him, he's far and away better than the Clinton's, Bush's, and other candidates who spend hundred's of thousands of taxpayer's dollars gouging their fat faces on food.

 

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https://www.randpaul.com/rand-pauls-fair-and-flat-tax-op-ed

 

I like his plan; it would help simplify a tax code that cost hundred of billions to comply with and he proposes to do it with previously proposed budget cuts. 

 

 

From article:

 

My tax plan would blow up the tax code and start over. In consultation with some of the top tax experts in the country, including the Heritage Foundation’s Stephen Moore, former presidential candidate Steve Forbes and Reagan economist Arthur Laffer, I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated. The first $50,000 of income for a family of four would not be taxed. For low-income working families, the plan would retain the earned-income tax credit.

 

I would also apply this uniform 14.5% business-activity tax on all companies—down from as high as nearly 40% for small businesses and 35% for corporations. This tax would be levied on revenues minus allowable expenses, such as the purchase of parts, computers and office equipment. All capital purchases would be immediately expensed, ending complicated depreciation schedules.

 

 

How can anyone look at the current tax code and the enormous number of man-hours american citizens and corporations waste complying with it and not think that something drastic needs to be done?

 

Rand Paul isn't even half the Libertarian his father is, but in many areas I agree with him, he's far and away better than the Clinton's, Bush's, and other candidates who spend hundred's of thousands of taxpayer's dollars gouging their fat faces on food.

 

+1

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15% tax all income - Including capital gains, dividends, gifts

0.5% federal tax on all liquid assets and real estate

0.5% VAT on all goods and services

 

Get rid of cash - Everything must be done electronically

 

$2k tax credit per dependent

 

Family of 4 with a 400k house, 1M in liquid assets, making 180k per year pays 26k in taxes. 

 

Family of 2 making 50k pays $3600 (same as FICA now)

 

Businesses-

 

15% Tax on all income (minus allowable expenses)

0.5% of all liquid assets and real estate

 

15% tax credit on payroll + benefits up to 12k per employee

 

 

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Interesting proposals.  These are sane.  Instead of these here's what we'll get with "reform"

 

-Businesses in Iowa that have less than 35 employees get a special tax credit.

-Companies that employ specialty iron workers who only use hand tools will get a tax break

-Taxes will increase on large companies but they'll find a way to outsource their work to a tiny tax-free island in the Pacific to avoid the new taxes

-Somehow spending for a new highway will be included

-One category of taxes will drop by 5%, another increase by 5% and net to no difference.  Yet one side will tout the 5% reduction and success while the other will claim it's a 5% increase in our taxes.

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15% tax all income - Including capital gains, dividends, gifts

0.5% federal tax on all liquid assets and real estate

0.5% VAT on all goods and services

 

Get rid of cash - Everything must be done electronically

 

$2k tax credit per dependent

 

Family of 4 with a 400k house, 1M in liquid assets, making 180k per year pays 26k in taxes. 

 

Family of 2 making 50k pays $3600 (same as FICA now)

 

Businesses-

 

15% Tax on all income (minus allowable expenses)

0.5% of all liquid assets and real estate

 

15% tax credit on payroll + benefits up to 12k per employee

 

 

Yuk, you know what that looks like in 40 years?

 

35% tax all income - Including capital gains, dividends, gifts with tons of exceptions, graduations, loopholes, deductions, all with complicated rules (see current tax code)

8.5% federal tax on all liquid assets and real estate with tons of exceptions, loopholes, deductions, complications etc

10.5% VAT on all goods and services with tons of exceptions, loopholes, complications, etc

 

Get rid of cash - Everything must be done electronically (the ultimate surveillance/police state, see: Orwell, George, "1984")

 

$2k tax credit per dependent with complicated rules and income limitations

 

Family of 4 with a 400k house, 1M in liquid assets, making 180k per year pays much more than 26k in taxes. 

 

Family of 2 making 50k pays much more than $3600 (same as FICA now)

 

Businesses-

 

45% Tax on all income (minus allowable expenses) with complicated rules, loopholes, deductions, exceptions, etc...

20.5% of all liquid assets and real estate with complicated rules, loopholes, deductions, exceptions, etc...

 

2% tax credit on payroll + benefits up to 12k per employee with complicated rules, loopholes, deductions, exceptions, etc...

 

End result more taxes paid, more man-hours spent figuring out multiple different types of taxes, 10X worse off than we are now.

At least if you make it one type of tax and simple, the worse that can happen is that it becomes complicated again and needs another reset.

 

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I like consumption taxes. They're the hardest to game. You want to live like your wealthy, then you'll pay wealthy-level taxes. If you're frugal, lower income, or setting aside all of your money for investment - then you're taxed the lowest through a limited number of purchases. You could also make it 2 or 3 tiered to adjust for people's incomes as well if necessary. 

 

Get rid of all credits/deductions/etc. Period. Charities would still survive without tax credits - people don't give $100 to charity to save $25 on their taxes. They could just give $75 if it's really that big of a deal - which would be a cut, but a survivable one.

 

I'd also add that the VAT should reset every year to adjust with the current budget/deficit to make Americans more budget conscious. It's insane that people don't appreciate the amount of debt per person or per taxpayer. It's staggering. That ignorance wouldn't likely continue if you're paying it each time you buy something.

It should also contain a provision that the VAT be enough to cover the current budget plus whatever amount is needed for  15-20 year amortization of the current debt. That way, current generations can't simply get away with highway robbery of future generations. They'll be paying back some of the principal.

 

While I'm saving the world, I'd say lower corporate rates and higher estate taxes for any wealth over some arbitrarily high limit - maybe $10M adjusted for inflation. Just think of all of the productivity we'd free up if we didn't have an entire industry dedicated to calculating your taxes just because it's become too damn difficult to do yourself. Do you know how ludicrous it is to have to pay someone to tell you how much you made and what % of that you owe?

 

Vote for me!

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2. Eliminate gift and estate taxes aka promote dynastic wealth.

 

Was there dynastic wealth before the gift and estate taxes were created?  Or did they solve a problem that only exists in the imagination?

 

http://www.forbes.com/sites/phildemuth/2014/07/07/the-family-is-a-machine-for-destroying-wealth/

 

Ah an article from Forbes magazine about no dynastic wealth. Wasn't the magazine started by the current Forbes' grandfather about 100 years ago.

 

I believe the word you are reaching for is "nepotism".

 

Forbes works for his money.  Was he fairly chosen for the job out of a pool of thousands of candidates?  Probably not.

 

http://www.celebritynetworth.com/richest-businessmen/ceos/steve-forbes-net-worth-2/

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While I'm saving the world, I'd say lower corporate rates and higher estate taxes for any wealth over some arbitrarily high limit - maybe $10M adjusted for inflation.

 

The size of the estate shouldn't matter.  Depends on what your goal is.  If you intend to limit one individual from being given too much, then it should be an inheritance tax instead of an estate tax.

 

$10m inherited by an only child is very different from $20m inherited by 8 children (4 of them spouses of 4 children born) and 14 grandchildren (22 people all put together).

 

It's not a dynasty when you inherit less than a million!  $20m may look like a lot, but it really only matters how much each person is actually getting IMO.

 

My grandmother died in 2011 and she had about $18 million in shares, cash, and property.  She had 4 children, all surviving, and each was married.  There are 14 grandchildren including myself -- we were all at least 35 yrs old.  It looks like a lot, but it's not a dynasty.  The only people to get more than a million were the children, who were all in their late 60s and early-mid 70s at the time.  It's not going to ruin their lives and they are too old for it to become a "dynasty" problem -- once divided amongst their children, it's just not a mind-blowing amount of money and won't change the lives much.  So to meet social goals of limiting dynastic wealth, I don't see why a $17m estate necessarily needs to be taxed.  And it wasn't taxed -- her estate was in Australia.

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While I'm saving the world, I'd say lower corporate rates and higher estate taxes for any wealth over some arbitrarily high limit - maybe $10M adjusted for inflation.

 

The size of the estate shouldn't matter.  Depends on what your goal is.  If you intend to limit one individual from being given too much, then it should be an inheritance tax instead of an estate tax.

 

$10m inherited by an only child is very different from $20m inherited by 8 children (4 of them spouses) and 14 grandchildren (22 people all put together).

 

It's not a dynasty when you inherit less than a million!  $20m may look like a lot, but it really only matters how much each person is actually getting IMO.

 

 

+1 and anything left to charity should be tax free, so someone with $20M could leave $1M each to 10 people and $10M to charity.  Anything that keeps it out of the hands of the politicians is a good thing.

 

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How can anyone look at the current tax code and the enormous number of man-hours american citizens and corporations waste complying with it and not think that something drastic needs to be done?

Don't knock the tax code, it helped put 4 kids through college. ;D

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The government (ostensibly) is wanting to raise taxes to redistribute it to help the less fortunate.

 

Spending your money is by definition spreading it around to people who are willing to work for it (providing you with goods or services in return).

 

A consumption tax:  does it encourage or discourage this? 

 

Let's say I get taxed 20% on what I spend.  Living within a budget, this means that LESS of my money is distributed DIRECTLY to the people who work for it (perhaps I take fewer vacations).  Instead, 20% of my budgeted expenditures will go FIRST through the government, which will waste it on other causes and only leave a portion left over to those who provided me with goods/services.

 

The question is:  can the less fortunate get access to my money through working for it (providing me with goods or services) or is there some impediment to their participating in that system?  There will always be crippled people, etc... but what about the rest?

 

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The government (ostensibly) is wanting to raise taxes to redistribute it to help the less fortunate.

 

Yes that is the line they want us to believe. What portion goes to the "less fortunate" as opposed to the military industrial complex or fighting the war on drugs or spying on everyone on the planet or ... 

 

The only reason a few exceedingly tiny crumbs are thrown to the less fortunate or used to sure up some of the crumbling infrastructure at all is so that we can keep believing that these things are the raison d'être for their existence. 

 

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See, if I spend less (due to taxes coming out of my budget) then the people who provide me with goods/services will have less income.  So how much of that income will actually make it back to them after going through the government?

 

Do my taxes put a damper on my spending, their income, or both? 

 

Is it my money that's being redistributed, or their "would be" income that is being redistributed?

 

It confuses me.  Above a certain level of after-tax income, any excess income will just get saved and not spent.  But there is a middle-ground there where most people exist -- raise their taxes and they'll spend less, which directly results in less income for the people who serve their needs.

 

 

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