Basically, the Flat Tax features one low tax rate with no deductions or special interest loopholes. The Flat Tax will not solve problems resulting from lack of participation in funding government by the proverbial 47% who pay no income taxes; consequently they will pay NO Flat Tax either. Only the names will have been changed to protect the guilty.
The VAT tax is European style consumption tax that is rife with loopholes and gross avoidance, and has resulted in EU VAT rates in the mid-20% range which is totally counter-productive.
The answer to the present income tax code is not the Flat Tax, but the “Fair Tax” as encompassed in the Maslar “Three-Page Tax Plan” (TPTP) that imposes a no-exception, no exemption 3% National Sales Tax (NST) across the board, taking the poisonous sting out of lobbyist fangs.
TPTP makes spending of all organizations, for-profit or not, along with 100% of the population, illegal or not, whether income is from legal sources or not, or from under the table, drugs, crime, investment, gift, or whatever, subject to the 3% NST when spent. According to a study published by Lanny Davis in The Hill, tax revenues would be about $4 trillion for budgeting, $4 trillion to pay down the national debt, and $4 trillion for Universal MediCare (UMC) for every legal resident in the US. UMC will save many states from bankruptcy, as state administered budget-busting Medicaid will no longer be necessary.
Wall Street type transactions would be taxed at ½ of 1%, putting smaller investors on par with giants that do High Frequency Trading (HFT) in nano seconds while ordinary investors are the first to lose and the last to gain. Programming errors caused panic that dropped a thousand points on the Dow Jones Industrial Average in minutes.
The Congressional Budget Office (CBO) must score the TFTP, but it takes a representative to do the submission, difficult for an individual, as most representatives ask for zip code first but do not allow e-mails from anyone outside their district.
To further uncomplicate the present unintelligible tax laws, nuisance and death taxes would be eliminated. In the event NST does not produce the $12 trillion annual revenue projected, there would be a simplified Income Tax (SIT) that treats ALL income equally: no loopholes, special treatment, exceptions, or exemptions. SIT reduces income tax rates to a graduated 20% max, for all entities, personal and business. The following are examples of effective tax rates under the SIT plan:
Effective Tax Rate on Taxable Income of $100,000: 2.74%
Effective Tax Rate on Taxable Income of $1 Million: 7.47%
Effective Tax Rate on Taxable Income of $1 Billion: 19.88%
Once the NST functions and produces tax revenues as projected, the IRS would be history as well as the temporary SIT.
The “Three-Page Tax Plan” and/or “Six-Page Plan to Fix It All” is available from [email protected]
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