GOP pundits and politicians have been throwing around the concept of a flat tax for quite a few years. They've suggested a one size fits all tax rate ranging from ten to eighteen percent, but what impact would this really have on taxpayers, especially if all deductions, credits, and personal exemptions were eliminated.
Those who would benefit the most from a 15% flat tax would be those earning wages of more than $379,150 a year. Almost all the rest of us would experience a tax increase with lower income earners seeing the most significant increases.
Why, you may ask? The reason is that very few of us pay the full amount of our actual tax rate. For example, someone who falls within the 25% tax bracket may actually pay only 10% in taxes after applying all the legal exemptions, credits, and deductions. Even those filing EZ tax forms benefit from standard deduction.
I'm not opposed to a flat tax, but I am opposed to the same flat tax applied to everyone. Bring on a more simplified tax code, but one size will not fit all.
Wednesday, September 21, 2011
Tuesday, September 20, 2011
Tax confusion
Politicians of both parties continue to posture and play the class warfare game. These opposing positions will only guarantee that nothing changes.
We need to create a more favorable environment for businesses, reduce government waste, simplify the tax code, secure Social Security and Medicare for seniors, and raise more tax revenues to begin paying down our national debt.
Compromises are need:
1. Reduce highest tax rate to 25% and eliminate loopholes,
2. Eliminate income tax on the first $25,000 of wages and first $25,000 of capital gains,
3. Change tax code to a graduated tax for both wages and capital gains ranging from 10% to 25%,
4. Eliminate loopholes and gradually reduce itemized deductions and exemptions,
5. Increase employee payroll tax (FICA) for Security Security and Medicare by 1/2 percent each year for the next eight years,
(public employees in Ohio pay 9.5% off the top for retirement)
6. Create a national sales tax (excluding food, medical, and housing) until national debt is reduced.
We need to create a more favorable environment for businesses, reduce government waste, simplify the tax code, secure Social Security and Medicare for seniors, and raise more tax revenues to begin paying down our national debt.
Compromises are need:
1. Reduce highest tax rate to 25% and eliminate loopholes,
2. Eliminate income tax on the first $25,000 of wages and first $25,000 of capital gains,
3. Change tax code to a graduated tax for both wages and capital gains ranging from 10% to 25%,
4. Eliminate loopholes and gradually reduce itemized deductions and exemptions,
5. Increase employee payroll tax (FICA) for Security Security and Medicare by 1/2 percent each year for the next eight years,
(public employees in Ohio pay 9.5% off the top for retirement)
6. Create a national sales tax (excluding food, medical, and housing) until national debt is reduced.
Monday, September 19, 2011
Major flaw in new Back to work plan
Businesses hire new employees because they have more work than they can handle with current staff. Getting a tax credit for hiring unemployed workers makes no sense. Employees cost a business money, both in the short term and long term. Employee benefits, including employer Social Security match, training, and health care insurance, can add 25 to 45 percent more to the cost of hiring a new employee.
This is so obvious that it boggles my mind.
This is so obvious that it boggles my mind.
Tuesday, August 16, 2011
Reform Capital Gains Tax Rates
Not taxing the first $25,000 of capital gains annually would benefit new and small investors. Eliminate all tax loopholes and increase the maximum rate to 25% for those earning more than $500,000 in capital gains.
Currently super rich benefit from lower capital gains taxes, often paying lower rates in total income than middle class wage earners pay in income tax. Warren Buffet brags that he pays only around 17% in taxes each year, since his income is primarily from capital gains and is not salaried. We should take him up on his challenge to increase his taxes.
Currently super rich benefit from lower capital gains taxes, often paying lower rates in total income than middle class wage earners pay in income tax. Warren Buffet brags that he pays only around 17% in taxes each year, since his income is primarily from capital gains and is not salaried. We should take him up on his challenge to increase his taxes.
Tuesday, August 9, 2011
Tax Reform Compromise - Simplified
1. Eliminate taxes on first $25,000 of annual income and first $25,000 of capital gains,
2. Cut loopholes, exemptions, and deductions,
3. Reduce all tax rates with 25% being highest rate,
4. Add National Sales Tax on all products, except food, medical, and housing,
5. Raise Social Security Tax rate to 10% over the next 5-10 years and eliminate contribution ceiling cap.
2. Cut loopholes, exemptions, and deductions,
3. Reduce all tax rates with 25% being highest rate,
4. Add National Sales Tax on all products, except food, medical, and housing,
5. Raise Social Security Tax rate to 10% over the next 5-10 years and eliminate contribution ceiling cap.
Saturday, August 6, 2011
Tax Increase or Tax Cuts?
I'm disturbed that our government and many others believe that paying only the interest on our national DEBT is sufficient and that we only need to keep raising our debt ceiling as we keep creating more spending programs. This past week we learned that our GDP now equals our national DEBT. This means that we need an explosion of economic growth along with a new look at spending and taxation.
If politicians would stop yammering at each other and really work on our national problems, they might start figuring out solutions. Since real solutions would probably cause them to be vilified in the media and every place else, they will probably end in deadlock.
The first thing to do is to take Social Security and Medicare off the table for the time being by increasing SS tax to 10% over the next five to ten years and remove the contribution ceiling. Use SS surpluses to offset Medicare increases temporarily until our national debt is on the mend. This doesn't mean that SS and Medicare are fixed. It just means that no one party can use them to bludgeon another. I can only dream.
The second big thing to do is to create a national sales tax, the entire proceeds of which will go towards paying off the DEBT. This VAT tax would not be added to food, medicines, or services rendered. There are people in our country who legally or illegally have large incomes, but pay little or no taxes. This sales tax would generate income from this group and also from visitors to our country.
The third step is to cut all existing government programs (remember SS and Medicare are not on the table) by 10%. I would like to say that the cut would be averaged, but no one wants their pet program cut, so cut them all by 10%.
Fourth step, everyone, even Press Secretary Jay Carney, realizes that small business not government creates jobs. So tax rates for businesses must be cut. This could be offset by eliminating loopholes and subsidies, but this needs to be done across the board and not favoring one industry or group over another.
Fifth step, I would like to see no income tax levied against the first $25,000 of income or capital gains. This would benefit lower income earners and seniors on fixed income.
If politicians would stop yammering at each other and really work on our national problems, they might start figuring out solutions. Since real solutions would probably cause them to be vilified in the media and every place else, they will probably end in deadlock.
The first thing to do is to take Social Security and Medicare off the table for the time being by increasing SS tax to 10% over the next five to ten years and remove the contribution ceiling. Use SS surpluses to offset Medicare increases temporarily until our national debt is on the mend. This doesn't mean that SS and Medicare are fixed. It just means that no one party can use them to bludgeon another. I can only dream.
The second big thing to do is to create a national sales tax, the entire proceeds of which will go towards paying off the DEBT. This VAT tax would not be added to food, medicines, or services rendered. There are people in our country who legally or illegally have large incomes, but pay little or no taxes. This sales tax would generate income from this group and also from visitors to our country.
The third step is to cut all existing government programs (remember SS and Medicare are not on the table) by 10%. I would like to say that the cut would be averaged, but no one wants their pet program cut, so cut them all by 10%.
Fourth step, everyone, even Press Secretary Jay Carney, realizes that small business not government creates jobs. So tax rates for businesses must be cut. This could be offset by eliminating loopholes and subsidies, but this needs to be done across the board and not favoring one industry or group over another.
Fifth step, I would like to see no income tax levied against the first $25,000 of income or capital gains. This would benefit lower income earners and seniors on fixed income.
Thursday, July 28, 2011
Why all the drama?
Goldman Sachs reported that US monthly tax receipts are sufficient to cover interest on our debt, monthly Social Security checks, Medicare and essential defense costs. Jay Carney, WH press secretary, said, "We lose our borrowing authority and that would be a bad thing."
I beg to differ. Our debt is a bad thing and all this excessive borrowing without the means to pay it back is a bad thing. We need to put a freeze on new spending bills and begin to roll back spending on literally everything else.
Social Security can pay for itself by increasing FICA tax to 10% and eliminating the $106,800 collection ceiling. Unfortunately politicians want to use SS to scare old people, so I don't expect to see any substantial change.
I beg to differ. Our debt is a bad thing and all this excessive borrowing without the means to pay it back is a bad thing. We need to put a freeze on new spending bills and begin to roll back spending on literally everything else.
Social Security can pay for itself by increasing FICA tax to 10% and eliminating the $106,800 collection ceiling. Unfortunately politicians want to use SS to scare old people, so I don't expect to see any substantial change.
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