Name:   water_watcher - Subject:   My tax plan Date:   11/6/2011 4:13:57 PM

INDIVIDUAL TAXES

A 3 tier flat tax on all income, no deductions.  Tiers are based on "excess" income over certain levels.  It would be on individual income from all sources (not combined for married people).

For example,

Tier I:  10% flat tax for all income over $15K up to $200K (the first $15k is excluded for everyone and pay no income tax, only a small consumption tax).

Tier II:  Tax from Tier I plus 20% tax on the excess over $200K up to $500k

Tier III:  Tax from tiers I & II plus 30% tax on the excess over $500K.

Examples:    $50K pays $3,500 ($50k - $15k * 10%)

$100K pays $8,500 ($100k - $15k * 10%)

$300K pays $38,500 (Max tier I=$18,500 + $100K * 20%)

$750K pays $153,500 (Tier I & II max =$78,500 + $250K * 30%)

Consumption tax:  2.5% on all purchases other than personal capital items such as homes and vehicles.  This also serves to generate some tax revenue on illegal income, and higher incomes would automatically pay more of the tax burden, since their spending would be higher.  Business “could” be exempt with a valid exemption certificate so there is only one tax collected and not have a compounding effect.

CORPRATE TAXES

Approach would be very simple ... all corporations pay 15% tax on calculated income before book depreciation and any individual compensation over $500k (excess over only) to satisfy the excessive income hawks.  

All new capital spending “in the US only” would be allowed a 3 year write off.  This would promote US investment and overseas investment gets no capital write-off.  Companies still in a loss position after these add backs, (ie start-ups and those in financial difficulty) would have up to a 3 year limit for not paying taxes under this structure ... then it would revert to a minimum tax of 3% of revenue.

SOCIAL SECURITY & MEDICARE TAX
Since you cannot keep raising retirement age.  You also want people to retire and allow others to move up and fill positions of those that should leave the workforce.

Going to a "lower rate" on "all income" may be the answer.  Instead of a combined 7.65% up to a limit (Medicare already has no cap), go to 4.2% on all income. It brings in more revenue, the lower income people will pay less for the benefits they ultimately receive, while higher incomes will pay slightly more.  The lower rate raises the breakeven point so only the highest incomes will ultimately pay more.  

There should be an option to invest a portion of what is contributed above a certain level for new people entering the workforce for the opportunity for a higher payout when they retire … or allow the company match to go in to a 401K or similar plan.