Personal Income Tax Should Be Mostly Based On People And Circumstance And NOT Things or income level !
Here we only prescribe personal income tax:
* Personal Income Taxes – A Flat Rate Tax – A fair rate of 14% with only the following deductions that everyone could enjoy – Income would include all personal income, including interest income, lottery winnings and inheritance (this would effectively eliminate the high inheritance tax and make it personal income without deductions that others do not enjoy).
First, we create a point system (similar to exemptions)
Each point is worth $4,000 in deductions of gross income (subject to change)
1.5 ( 1 1/2) points – Head of household – you are the one(s) who owns or rents a home (this covers single or married filing jointly as a total). This differs from existing head of household definition that said you were just the primary breadwinner. Here you must own or rent a home regardless of being the primary earner.
1 point – Times The Number of persons your income(s) supports including SELF living in the same home. Other than SELF and wife/husband if filing jointly, must be person(s) under the age of 19 or under 26 if enrolled in higher education or over 62. These persons who’s gross income must be less than the value of 3 points ( $ 3 points ) for the deduction. This would allow a credit for taking care of elderly parents or kids/kids in college but must live in your home.
1 point – for each if any of those your income supports is developmentally disabled, handicapped or blind/ deaf including SELF or wife/husband if filing jointly. Others at any age having incomes less than the value of 3 points ($ 3 points or $12,000 in our example).
1 point if you are 62 or older and still work for the majority of your income. (Max Social Security age minus 5 years).
Up to .5 points ( $ 1/2 point ) for money placed in retirement accounts. Full Flat Tax Rate (14% in our example) paid for all money removed early regardless of current year filing when removed. No cumulative limit. Interest Income from this deferred money would be taxable in the year received. Taxed at Half Full Flat Rate (7% in our example) any amounts removed at age 62 or older or no tax if removed at 67 or older. Incentive for individuals to be self dependent at retirement.
Up to .5 points ( $ 1/2 point ) rainy day savings plan with a maximum rainy day savings account of ( $ 2 points or $8,000 in our example) collectively that would just be reported as income the year you withdraw. This allows you to save some money in good years tax free to be used in a bad year but has a max of ($ 2 points) that can be collectively deferred. Interest from this account would be income that is taxable while the principle is deferred until withdrawn. This can help keep people off government assistance in a bad year and promotes savings.
Up to .5 points (1/2 point) per month you were physically or mentally unable to work verified by a doctor. An additional 1/2 point per month you were hospitalized (16 total days could qualify as 1 month or 1 month and 16 days would qualify as 2 months). This provides relief that the deduction of medical expenses would have provided but does not have the requirement to have a level of expenses to qualify. Any out of pocket “emergency medical expense” totaling up to ($ 3 points) can be deducted at 100% in the year it is paid if payment plan is arranged. Encouragement to pay hospital and doctor and keep everyone’s costs and taxes down.
Up to a total of the value of 1 point ($ 1 point) in itemized deductions of charitable contributions to non-profit organizations and or energy credits, disaster relief funds, tools required for your work, turnpike fees for travel to work etc. These deductions must be renewed yearly to keep them up to date with current needs. No deduction can be delayed to take effect past the next tax year. Politicians will have to answer for them in this way.
This and any itemized deductions later created total shall be limited to the value of 1 point total of all deductions ( $ 1 point or $4,000 in our example) .
To use EIC (Earned Income tax Credit), would require a qualifying child and recipients must earn at least ($ 1 point ) of income and no more than ( $ 3 points ) to qualify and be issued at the rate of 4% of actual income times the number of points you qualify. A single woman with 1 qualifying child who pays no rent and does not own a home that made $4,000 would receive $320 EIC and that same women with child making $11,999 (max) would receive $1440 in EIC.
EIC Maximum credit/payout of the value in dollars of .5 point ( $ 1/2 point or in our example $2000 max ). This still keeps the “work pays” value for low income level persons providing transitional help to get off of public assistance.
No other deductions – This would mean no mortgage interest deductions, health care costs or political contributions. Capital gains from the stock market and all investment income shall be subject to business tax forms and rates.
-End of deductions-
The taxes:
The first 2 points of income after deductions ( $ 2 points or $8,000 in our example) are taxed at 1/2 the flat rate tax. (everyone with income over deductions is eligible).
The remaining income is taxed at full 14% flat rate (subject to change by the President AND a 60% vote in the House of Representatives and the Senate). The exact rate is paid by all income levels past the 2 point reduce rate and can not change by more than .5% (one half percent) in any calendar year.
What Could/would be allowed to change:
If, because of inflation etc, when we wish to change this, only the amount of the value of the point ($4,000 per point under this plan) but the formula stays the same. Items could change within itemized deductions to fit a National Calling of help to push issues (like Energy Tax Credit or disaster relief funds), but the maximum of the value of 1 point stays ( $ 1 point max) for itemized deductions (our example of $4000 per point would cap deductions of any sort to $4000 reduced gross income). By only being able to define the value of a point, and keeping this proportioned formula, we keep Income Taxes Fair. Based on people and peoples social circumstance and allows some incentives for national calling/encouragement.
Changing the value of a point can have a fair and even effect on everyone’s taxes while the rates stay the same.
Our formula here provides only special relief for those that have worked but did not make very much and everyone else is treated exactly the same. Nobody qualifies for deductions not able to be enjoyed by any other income level of taxpayers.
For example, the old mortgage interest deduction for the second home could not be enjoyed by those who were not rich enough to own a second home or even the first one and unfair. When this was eliminated, CEO’s made it part of their corporate charter that the company provide them with a house paid by the company. But this is a issue for corporate tax rates not prescribed here. Making the benefits of that house taxable income is yet a issue to be dealt with. It should be the same as, in our example, inheritance and income. The same should be applied to vehicles provided by a company as part of a benefit package.
Our system only provides for the maximum of the dollar value of 1 point ( $ 1 point or $4,000 in our example) in itemized deductions to vary between taxpayers.
Everyone making income over deductions for the first 2 points ( $8000 in our example) pays half full rate ( equals 7% in our example ) and all income above that is full rate (14% in our example) everyone gets the same tax rates at all income levels.
Those with high incomes are still afforded the same deductions as those with low incomes with the exception of the EIC credits. Those that would argue against the EIC credits, I say only this, if you can not help the less than .5 % (one half percent) of the folks that are trying, who are you?, if you can not realize that to help prevent public assistance requires encouragement and potentially saves you tax dollars in the long run. Yes, deadbeats will be deadbeats and have no income and taxes to pay. This addresses those that try.
This is humanely “FAIR” and makes sense by any stretch of the imagination!
Yet for us to discuss:
We will have a proposal for Investment & Corporate tax rates but this is a very complex system that needs simplification. A bunch of things get HIDDEN in this complexity that has been created. Yes the rates are high but the deductions allowed keep them from paying that rate on very much of the money made.
Of particular interest, smaller ma and pa company’s that have 50 or fewer employees, often do not enjoy the deductions provided to the really big company’s and therefore pay a effective higher rate than those giants and sometimes even just pay more in dollars than the big guys. Totally unfair.
