In Honor of Tax Day, let's look at an alternative. It is a time for fresh ideas, not merely tinkering at the edge of a corrupt system.
Here is the Tax Plan to save the economy, AND Social Security
Let's get the labels out of the way FIRST; It is a FLAT TAX!
Now on to the Details;
A Flat 18% income tax. No loopholes, deductions, carve outs, No ways for crooked politicians to craft new tax policy specifically for their donors. Only a generous personal exemption of $10,000 per taxpayer, and $5,000 per dependent. THAT'S IT! OH, and if you end up with zero tax liability, or less than $500.00, you MUST pay the MINIMUM tax of $500.00. EVERYONE must have skin in the game. Everyone benefits from society, therefore everyone must contribute.
For Businesses it is ALSO simple. a Flat 18% tax on net operating profits.
Now to the numbers;
According to the IRS; there are 209,000,000 taxpayers earning $12.5 trillion dollars. There are also 62,000,000 dependents. This means that we will lose $2.1 trillion to personal exemptions, under my plan, leaving $10.4 trillion being taxed at 18%, bringing in $1,872,000,000,000.00.
According to the IRS there are $1.724 trillion in business profits. taxed at 18%, this brings an additional $310,320,000,000.00 for a total revenue of $2.183 trillion.
Now here is where it gets fun;
TOTAL Federal revenue for 2010 was:
$2.2 Trillion. of which;
$1.1 trillion was income taxes
$900 billion was SS and Medicare/aid
$200 billion was business taxes.
NOTICE, that our income tax plan covers Social Security revenue as well. This is to protect those Social Security recipients collecting, or about to collect social security. For anyone 50 or under, They will have the option to "opt out" of social security. This means that the 12.4% of their pay will keep being paid, but to a retirement fund that THEY OWN AND CONTROL, NOT CONGRESS! Initially only broad based index fund, municipal bonds, and other "safe" investments will be allowed, but those restrictions will ease, as more people opt for that and the burden on the taxpayer eases.
The Flat tax on business, and the prohibition on Congress from screwing this up, will make the economy explode. Gone will be the trademark temporary band aids and uncertainty of the Obama administration. Gone will be the endless need to bribe crooked politicians for favors. Gone will be the need to spend, collectively $600 billion on tax preparation, planning, and avoidance.
The flat tax on individuals will mean the savings of $64 billion spent on income tax preparation, and avoidance. A Flood of new capital for investment, and the opening up of former tax shelters to productive use of capital, as the tax consequences have diminished, as well as the need to avoid future political footballs. Social Security will be funded for those who wish to remain in it, and for those who wish to increase their retirement funds, they will be able to do so.