Forum Post: as close to a panacea as possible

Our present federal tax code is unjustifiably complex and full of loopholes designed to allow the rich to avoid their full share of taxation. Although the original and primary rationale for the graduated income tax (the concept which is the heart of our code) was to alleviate economic inequality, that machinery is now stuffed with provisions added over the years by special interests - provisions which now serve only to exacerbate economic inequality in our country.

There has been an excessive and dangerous out-of-control expansion of the gulf between the wealthy and the middle/working class in America.

In addition to this very disturbing development, and to make the matter even more dire, our social safety net for the people who fall out of, or never had the chance to enter, the middle class (the unemployed and economically deprived) is tattered and frayed and is now completely inadequate. Welfare programs have been decimated, and unemployment compensation systems are now stretched to the breaking point.

I am advocating a new approach to taxation which will address and, I believe, go far to cure all these problems. I There is a way to restructure the tax code which will make it simple, efficient and fair. It will not only put the brakes on the runaway gap between the rich and the rest of us, but, more importantly, it will ensure that every American will be able to survive even long-term unemployment.

This plan will provide a guaranteed base income in exchange for public service hours. Welfare programs and state unemployment insurance programs will become superfluous and unnecessary.
The Guaranteed Minimum Income concept was, believe it or not, first proposed by Richard Nixon’s economic advisors in the 1970’s. It was a gutsy shift from the gospel of laissez-faire economics so revered by so many in power.
My plan is enhanced from that basic idea. It ensures that those most in need will receive the greatest support. It will prove a truly direct stimulus to the economy., and its initial cost should be no more than recent indirect and not very effective related attempts by the government.

Above all, the plan will also have the great advantage over current band-aid approaches because it will be permanently built into the structure of society. It will be a major step towards reorienting America’s economic structure away from the law of the jungle and towards a more humanitarian ethos. America can become a new role model for the entire world.

         KEY PROVISIONS OF THE PLAN

1. Tax brackets are eliminated because the plan incorporates a “flat tax” concept, but with important provisions to adequately tax the highest incomes.

The plan is built around a flat rate of 50% which will be applied only to TAXABLE INCOME. (Taxable Income is Gross Income minus a STANDARD DEDUCTION of 50%, up to a maximum deduction of $50,000). This, in effect means that only incomes well over $1 million will actually be taxed near the full 50% rate. 90% of taxpayers will see a substantial decrease in their tax liability. (see notes #2, 3)

1. Substantial tax relief for the middle class and working poor.

A TAX CREDIT of up to $15,000 for persons age18 or over is then subtracted from the tax liability (so final tax would be: 50% of Gross Income minus the Standard Deduction; then the Tax Credit is applied. TAX CREDIT diminishes to a minimum of $6,000 per person as income rises.
(There is also a fixed $500 credit for each child.)

1. Guaranteed income support for the unemployed and underemployed (with the key proviso that all able-bodied persons taking such support participate in a public service program). If Tax Credit exceeds the Tax Liability, the difference is redeemable in cash in exchange for COMMUNITY SERVICE TIME at a rate of $10 per service hour. (see note #1)

2. Itemized deductions are eliminated (they serve only to complicate our current code and give another unfair advantage to the highest income bracket.)

3. Every taxpaying citizen will have the opportunity to put part of their income into a tax-exempt IRA which can be used for future first-time home purchases and for school costs of any family member in the household. (I.R.A.’s of up to 6% of gross income with a limit of $12,000) .