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What should the next US tax code look like?

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Re: What should the next US tax code look like?

Unread postby Hawkcreek » Sun 16 Apr 2017, 11:22:27

vtsnowedin wrote:
Hawkcreek wrote:Going to a park is voluntary, but the funds to set aside, develop, and maintain the highways to that park are not voluntary. Effectively, the poor person spends a higher portion of his income to see that park than a rich person.

Transportation is only four percent of the Federal budget and that is financed by the Federal share of the gas tax so those that use the roads pay for them as they go.

If you include the gas tax, the poor pay even a higher percentage of their income. Thanks, I forgot that.
Another fee/tax that is regressive. That is what I am getting at.
The whole system makes sure the poor pay a much higher percentage than the rich.
I want everyone to pay the same percentage. Not hard to understand.
"It don't make no sense that common sense don't make no sense no more"
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Re: What should the next US tax code look like?

Unread postby vtsnowedin » Sun 16 Apr 2017, 11:24:56

My version has a top tax rate of twenty five percent because I believe that is plenty progressive enough if most of the tax deductions have been removed or restricted. Someone taking in a million a year paying $250,000 is one big check to send in.
I also would like to consider making stock portfolio profits taxable on a accrual basis so that people pay every year on their profits and no capital gains tax to pay when they finally have to settle up. One down side of that is that if you had a bad stock market crash very little revenue would come in that year.
That way Warren Buffet and Bill Gates would be paying the same rate as their secretaries. :)
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Re: What should the next US tax code look like?

Unread postby Plantagenet » Sun 16 Apr 2017, 11:34:16

Outcast_Searcher wrote:The VAST majority of the complexity in the tax code isn't computing the rate. It's computing the INCOME. The flat tax doesn't do ANYTHING to fix that.

If someone like Trump or Gates or Buffett, etc. has a bazillion complex investments, the complex process to compute that income is STILL THERE under a flat tax -- even if the rich person has to pay the tax on all of the income (which I agree with).

Thus, if you want that tax to be (generally) paid correctly, you still need a huge preponderance of the current IRS structure to monitor the compliance of complex returns (unfortunately).

And if you simply say, "fine, let's get rid of all that complexity and the IRS resource that oversees it" -- I'm with you in enthusiasm for shrinking the IRS, but HOW would we effectively do that AND ensure that clowns like Trump actually pay 30% of anything close to ALL their income in all their complex, entangled, accountant and lawyer created/enhanced, investments?


Obviously you'd still need some kind of much shrunken IRS to insure compliance with a flat tax.

The difference is that instead of hassling people who make $50k a year the IRS could focus on people like Warren Buffet who make, say, $50 million per year.

I've got a friend who works as a mountain climbing guide and makes about 25K a year and lives in a van. The IRS is STILL hassling him over a $159 tax bill that the IRS says he owe them from two years ago based on the IRS saying he didn't report his Alaska Permanent Fund Dividend when he actually did report his dividend fund income. At one point he even sent them a check for $159 to shut them up----but they have no record of cashing his check so they're still after him. This year they want to deduct the $159 from his giant $312 dollar refund. Its crazy!

Over a hundred million working class Americans just earn a salary---their taxes (and their life) would be much much simpler with a flat tax.

"Its a brave new world"
---President Obama, 4/25/16
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Re: What should the next US tax code look like?

Unread postby vtsnowedin » Sun 16 Apr 2017, 11:37:56

Hawkcreek wrote:
vtsnowedin wrote:
Hawkcreek wrote:Going to a park is voluntary, but the funds to set aside, develop, and maintain the highways to that park are not voluntary. Effectively, the poor person spends a higher portion of his income to see that park than a rich person.

Transportation is only four percent of the Federal budget and that is financed by the Federal share of the gas tax so those that use the roads pay for them as they go.

If you include the gas tax, the poor pay even a higher percentage of their income. Thanks, I forgot that.
Another fee/tax that is regressive. That is what I am getting at.
The whole system makes sure the poor pay a much higher percentage than the rich.
I want everyone to pay the same percentage. Not hard to understand.

I understand what you want to do but I think it would be very hard to accomplish. For one thing quite a few poor people live in inner cities and don't own a car so pay no gas tax while a poor person living in the country might drive his car thirty thousand miles a year just getting to and from his job. The only way I see to give the working poor a break is a good sized standard deduction which exempts half or more of their small incomes recognizing that a lot of that income goes to state and local taxes and fees.
The numbers I put forward above would have a couple making $45K before they paid any Federal income tax. That works out to $22.50 per hour for one full time worker or $11.25 each if they are both working.
That brings up another question. Should a two worker family get another deduction to defray the cost of getting to that second job , day care, etc. ?? :?:
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Re: What should the next US tax code look like?

Unread postby Outcast_Searcher » Sun 16 Apr 2017, 11:49:48

Plantagenet wrote:
Outcast_Searcher wrote:Over a hundred million working class Americans just earn a salary---their taxes (and their life) would be much much simpler with a flat tax.

I agree that for the majority of working class Americans, a properly designed flat tax would be better re simplicity.

I'm merely pointing out that the complexity doesn't go away for the rich, and so if you want the rich to pay their fair share of taxes, the IRS won't go away.

Your friend should have invested $50 or $100 in a tax preparer to work with him on fixing the IRS issue if he truly sent them the $159 check already, vs. sending them another $159 check. Those situations can be straightened out with proof -- I've seen it happen numerous times with friends and relatives over the years. The IRS isn't "evil" (overall), it's just big and sadly inefficient at times. It just wants to be convinced that the tax owed has been paid.
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Re: What should the next US tax code look like?

Unread postby Plantagenet » Sun 16 Apr 2017, 11:55:16

Outcast_Searcher wrote: The IRS isn't "evil" (overall), it's just big and sadly inefficient at times.


For many taxpayers, thats a distinction without a difference.

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Re: What should the next US tax code look like?

Unread postby Hawkcreek » Sun 16 Apr 2017, 12:17:41

Plantagenet wrote:
Outcast_Searcher wrote: The IRS isn't "evil" (overall), it's just big and sadly inefficient at times.

For many taxpayers, thats a distinction without a difference.

"Evil is as evil does", to bastardize a Forest Gump quote.
"It don't make no sense that common sense don't make no sense no more"
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Re: What should the next US tax code look like?

Unread postby Hawkcreek » Sun 16 Apr 2017, 12:49:37

vtsnowedin wrote: That brings up another question. Should a two worker family get another deduction to defray the cost of getting to that second job , day care, etc. ?? :?:

Nope... that starts building in inequality again. One couple could have a job in the same building, another could work 100 miles apart. This would be about income, not life choices.
"It don't make no sense that common sense don't make no sense no more"
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Re: What should the next US tax code look like?

Unread postby vtsnowedin » Sun 16 Apr 2017, 13:04:19

Hawkcreek wrote:
vtsnowedin wrote: That brings up another question. Should a two worker family get another deduction to defray the cost of getting to that second job , day care, etc. ?? :?:

Nope... that starts building in inequality again. One couple could have a job in the same building, another could work 100 miles apart. This would be about income, not life choices.

Your a heartless bloke aren't you?
Your never going to achieve equality just achieve some degree of fairness.
Do we want to encourage couples to marry and have children? Is it better to have both working to make ends meet rather then qualify for public assistance on just the one low income?
Another point to make. Social security payments should be made based on the total of the couples taxes paid not just the highest earners. Right now the one income family gets a better deal then a two earner family even though they paid in on the same amount of combined income. And those payments should not be taxable federal or state for anyone receiving less then $100K a year of taxable income.
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Re: What should the next US tax code look like?

Unread postby Subjectivist » Sun 16 Apr 2017, 13:27:30

vtsnowedin wrote:
Subjectivist wrote:
Besides, to fund the basic needs of Government as opposed to the wants of the politicians a 20 percent tax is excessive. The government should supply national defence and infrastructure backed up by a court system. Very little else is either hecessary or proper for Government to be involved in.

So you would eliminate social security ,medicare and welfare and unemployment insurance? That is two thirds of the Federal budget.


You asked what it Should look like, not what it Will look like.

Social Security is a separate issue and should be completely separated from the Government. The money should be collected and placed in an IRA under you and your financial advisors control, a forced savings and investment plan, not sent to Uncle Sam to be squandered today and promised tomorrow.

Medicare is also a separate issue and I will observe that since its creation the medical cost in America has become so distorted it no longer resembles the cost structure it had before Medicare, nor does it resembles costs n any other country on the planet socialized medicine or not. It has been a disaster top to bottom.

Welfare and Unemployment insurance are both properly state level issues. Plus unemployment is paid into state funds by employers, so endless extension funds from the federal government is just another way of distorting the system as it is intended to work.

Benjamin Franklin wrote:I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. There is no country in the world where so many provisions are established for them; so many hospitals to receive them when they are sick or lame, founded and maintained by voluntary charities; so many alms-houses for the aged of both sexes, together with a solemn general law made by the rich to subject their estates to a heavy tax for the support of the poor. Under all these obligations, are our poor modest, humble, and thankful; and do they use their best endeavours to maintain themselves, and lighten our shoulders of this burthen? On the contrary, I affirm that there is no country in the world in which the poor are more idle, dissolute, drunken, and insolent. The day you passed that act, you took away from before their eyes the greatest of all inducements to industry, frugality, and sobriety, by giving them a dependence on somewhat else than a careful accumulation during youth and health, for support in age or sickness. In short, you offered a premium for the encouragement of idleness, and you should not now wonder that it has had its effect in the increase of poverty.
II Chronicles 7:14 if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.
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Re: What should the next US tax code look like?

Unread postby Hawkcreek » Sun 16 Apr 2017, 13:53:16

vtsnowedin wrote:
Hawkcreek wrote:
vtsnowedin wrote: That brings up another question. Should a two worker family get another deduction to defray the cost of getting to that second job , day care, etc. ?? :?:

Nope... that starts building in inequality again. One couple could have a job in the same building, another could work 100 miles apart. This would be about income, not life choices.

Your a heartless bloke aren't you?
Your never going to achieve equality just achieve some degree of fairness.
Do we want to encourage couples to marry and have children? Is it better to have both working to make ends meet rather then qualify for public assistance on just the one low income?
Another point to make. Social security payments should be made based on the total of the couples taxes paid not just the highest earners. Right now the one income family gets a better deal then a two earner family even though they paid in on the same amount of combined income. And those payments should not be taxable federal or state for anyone receiving less then $100K a year of taxable income.

You hit the nail on the head. I want to see equal percentage given, but I know that people will never be equal. Some will be smarter and make good life choices, some will be lazy, and make poor life choices. Some degree of fairness, that did not take from the poor and middle class and give to the rich, would be possible to achieve. That I would like to see happen.
Actually, I know that is impossible too, in reality. This whole topic is just mental masturbation, because changes that take money away from the elite have absolutely zero chance of happening.
You all know that, just like I do.
"It don't make no sense that common sense don't make no sense no more"
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Re: What should the next US tax code look like?

Unread postby vtsnowedin » Sun 16 Apr 2017, 14:18:53

Hawkcreek wrote: I know that is impossible too, in reality. This whole topic is just mental masturbation, because changes that take money away from the elite have absolutely zero chance of happening.
You all know that, just like I do.

Much of what is discussed here is nothing more then idle chatter so this topic is as good as the next. What the best tax code would be compared to what is possible to get through the political process is as you say two entirely different things, but if we had a well thought out vision of what it should be we could then work towards that goal in the small steps that are possible in Congress.
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Re: What should the next US tax code look like?

Unread postby careinke » Mon 17 Apr 2017, 04:44:51

You all seem to be stuck on Income. It must be some ingrained instinct to penalize people for making more money than you. How dare they be more successful than you. Lets punish them by taking more of their money! They owe us!!!

In truth, the vast majority if not all of our problems can be condensed into two problems; Over population and overconsumption. Climate change, poverty, resource depletion, wild food sources, increasing animal extinctions, antibiotic resistance, waste dumping, etc, etc, etc, can all be connected to overpopulation and overconsumption. Both need to be reduced. We need to "punish" population growth and overconsumption, not productivity, not savings, not property ownership, not labor. I believe consumption taxes, properly configured, and sold to the public correctly, can help address both overpopulation and overconsumption. The current tax structure does not.

Before I lay out my plan, I should share my belief system. 1. I believe I am responsible for myself and my family. 2. I believe in care for the earth, care for people, and care of the future and base most of my decisions against those three ethics. 3. The only legitimate use of force is for self defense our defending someone else. 4. Without integrity, you have nothing.

OK, if I could snap my fingers and change the US tax system here is what I would do based on my belief system.

1. I would start with a clean slate and eliminate ALL current taxes: Income, business, property, Social Security, FICA, all taxes.

2. All tax revenue would be based on a sales tax for purchase of new goods. The tax rate would be based on the amount required to run the federal government, without deficit spending, while servicing the debt interest and eventually begin to pay down the debt. I'm not really going to get into what to spend the money on as that is not the focus of this discussion (although I have some great ideas that would help).

3. All adult US citizens would be given a "Pre-bate" that would cover everyone's consumption taxes up to 1.5 times the poverty rate. This would result in several benefits. First it eliminates the poor from paying any taxes, and since used goods are NOT taxed, when sold, there is a good chance the poor may actually come out ahead. I chose 1.5 times the poverty rate so theoretically two adults would also be able to cover one child's poverty level taxes, while at the same time not incentivizing multiple children. Of course a certain amount of consumption is required to live, the pre-bate basically covers the taxes for subsistence, so in reality your tax is now voluntary since you are not taxed on your survival needs.

4. Companies and governments would also be required to pay the tax on new purchases. See we still get to tax those evil companies, and as a bonus the governments too. Also as we get replaced by AI and robots, the companies pay a sales tax to the government for their purchase. On the other hand, the companies do not have to pay taxes on their labor, do not have to base their business decisions on current tax policy, and don't have to spend endless hours filing tax paperwork.

5. I would add an additional consumption tax on all fossil fuels as close to the source as possible. This additional tax would start at 100 percent and rise by ten percent per year, forever. The funds would be directly applied to paying down the national debt through the repurchase of US government bonds with no additional bond issues. Once the debt is paid off, the money could be redistributed equally to all US adult citizens. Once again there would be no exemptions on paying the tax( companies or governments). Also, a carbon tax would be assessed at the borders for all incoming goods.

6. I have to address social security for a couple of reasons, but primarily to get the government out of our personal finances. At the same time I feel we have an obligation to both the elderly and the amount already invested by individuals in the current system. So I would immediately stop all future contributions to Social Security. Then I would keep all of the other Social Security laws and regulations except for reporting income. So if you are drawing SS now, you continue drawing it but it is not taxed and not reduced if you make to much money. If you are 50 years old, you and your employer stop paying SS taxes, but you can't draw it before age 62 (unless disabled, same as today). Once you reach age 62 or older all the current rules apply, but the amount is based like you stopped working at 50 (when you stopped paying). Eventually everyone who contributed to SS will be paid off and the system dies a quiet death.

I would replace SS with an Old Age Pension, set at twice the poverty rate, and paid to all US citizens starting at the age of 50. Of course they would also get their sales tax pre-bate just like all other US adult citizens. Plus citizens vested in SS would also get their due SS payments. I chose fifty to help offset the job losses due to automation and AI. Plus it was when I officially "Retired" and I have thoroughly enjoyed it so far.

I think this tax policy would reduce consumption, promote self reliance, reduce pollution, prove to be a progressive not regressive tax for most people especially the environmentally conscious ones. It does not subsidize population growth, and adds real monetary value to peoples efforts to grow a portion of their own food.

So lets plug in some numbers/guesses and see how they would affect different interests: I'm going to assume the magic bean counters figured out we needed a 100% sales tax on all newly sold goods, and the poverty line was $12,000 for an adult (18 year old) US citizen. So starting at the bottom and working up (Income wise):

A. 20 year old Illegal Eddy AKA Undocumented worker Eddy - Lets be frank, it sucks to be Eddy under this system. He gets no pre-bate because he is not a US citizen. In addition, practically everything he buys has doubled in price. It turns out Eddy made a bad choice coming here and moves on to Canada or something.

B. 18 YO Panhandler Sam, earns $6,000 per year panhandling, US Citizen, never paid SS taxes. Sam is pretty sad under the present system, he is probably dumpster diving for food and most of his calories may be derived from liquor. Under the new system his $6,000 would only buy $3,000 of food. But wait, there's more! As an adult citizen he gets a $18,000 pre-bate just like every other Citizen. That effectively buys another $9,000 dollars worth of food added to his $3,000 worth of food earned through pan-handling gives him a grand total of $12,000 worth of food! That's twice as much value for Sam under the new system. Hooray for Sam!!! And if he lives to be 50, he can add another $24,000 per year.

C. 18 YO Wendy Waitress, making $7.50/hr, working 40 hrs per week/48 weeks/year = $14,400 per year, minus 7.5% for SS security taxes = a net of $13,320 dollars per year for just above poor Wendy. Under the consumption tax (14,400/2)+(18,000/2) = a net of $16,200 or $2,280 more buying power than under the present system. Yea!! A win for Wendy!

D. 30 year old Paul and Paula Perfect with their two children, Paul makes $20,000 per year as a cook, and Paula is a Scientist pulling in around $50,000. After taxes, under the present system, they net around $59,000 per year. New system net around $53,000 uh oh. A couple couple grossing $70,000 comes out better under the current system, about $6,000 better. But that is assuming they spend it all on taxable items. Used items are not taxable, services like babysitters, labor are also not taxable. Having less children reduces both the population and overall consumption. Perhaps it makes better economic sense for Paul to quit his job and become the home manager/economist turning their home into a profit making money saving food producing teaching platform for the children? So even though it initially looks negative there are certainly easy ways to compensate at this level and even come out ahead.

As you continue up the scale it gets worse and worse for the consumers or perhaps I should say over consumers.

So my system encourages conservation, and reduces consumption, taxes FF's and eliminates their subsidies, reducing strain on the earth. It also makes it more profitable to produce at least some of your own food, and take responsibility for ones self. At the same time it provides a better economic outcome for the poor (with the exception of illegal aliens) than the present system by providing every adult US citizen with a pre-bate to offset the sales tax for essentials. This makes the system more voluntary than the present system that taxes productivity. It's simple and open and pretty much eliminates the need for tax lobbyists. It also keeps the government out of your personal financial affairs and eliminates loopholes.

So there you have it, my suggestion for a change in our tax paradigm.
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Re: What should the next US tax code look like?

Unread postby vtsnowedin » Mon 17 Apr 2017, 07:55:56

Careinke wrote,
1. I would start with a clean slate and eliminate ALL current taxes: Income, business, property, Social Security, FICA, all taxes.

Buy killing property taxes you move all local government functions to the Federal level so the snow plow drivers become Federal employees?
3. All adult US citizens would be given a "Pre-bate" that would cover everyone's consumption taxes up to 1.5 times the poverty rate. This would result in several benefits. First it eliminates the poor from paying any taxes, and since used goods are NOT taxed, when sold, there is a good chance the poor may actually come out ahead. I chose 1.5 times the poverty rate so theoretically two adults would also be able to cover one child's poverty level taxes, while at the same time not incentivizing multiple children.

Current poverty level for a one person household is $11,770 so with your method a couple would receive $35,310 or $679 a week on their EBT cards. Would anybody go to work at a low paying job?

5. I would add an additional consumption tax on all fossil fuels as close to the source as possible. This additional tax would start at 100 percent and rise by ten percent per year, forever. The funds would be directly applied to paying down the national debt through the repurchase of US government bonds with no additional bond issues. Once the debt is paid off, the money could be redistributed equally to all US adult citizens. Once again there would be no exemptions on paying the tax( companies or governments). Also, a carbon tax would be assessed at the borders for all incoming goods.


So you are going to create peak oil by decree not by geology??


I would replace SS with an Old Age Pension, set at twice the poverty rate, and paid to all US citizens starting at the age of 50. Of course they would also get their sales tax pre-bate just like all other US adult citizens. Plus citizens vested in SS would also get their due SS payments. I chose fifty to help offset the job losses due to automation and AI.

So a couple retire on seven times the poverty rate? $82,390 regardless of how much they worked or paid in taxes?

Your proposals would certainly change human behavior but I'm afraid it would not be in a positive way. And as I commented on MD'S proposal you would let the rich who have discretionary income escape all taxes on the portion not spent. Very interesting idea and certainly out of the box thinking.
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Re: What should the next US tax code look like?

Unread postby vtsnowedin » Mon 17 Apr 2017, 08:13:39

Some interesting points here.
http://www.huffingtonpost.com/entry/rep ... mg00000009

Yet for decades, that underlying premise has been wrong: Americans at almost every income level are paying a smaller percentage of their salaries in federal taxes than they were 10, 20 even 30 years ago.

Only the richest one-fifth of households are paying a higher percentage in federal taxes than they were a decade or two ago, and that’s only because of increases passed under former President Barack Obama to pay for his signature health care law.

Meaning that for liberals who support the idea of a progressive income tax ― one that imposes higher rates on the wealthy ― the promise of a middle-class tax reduction as part of a coming “tax reform” package could actually be a Trojan horse. Given House Speaker Paul Ryan’s (R-Wis.) longtime desire to lower the top rates, any reduction for middle and lower-income taxpayers would almost certainly be dwarfed by savings for the wealthiest.

“They keep saying: There are not going to be any tax cuts for the rich. Yeah, right,” said Roberton Williamson, with the liberal-leaning Tax Policy Center.

“It’s almost became a religious belief, a religious cult. Tax cuts are an elixir for everything. They are always good,” said Norman Ornstein, of the conservative-leaning American Enterprise Institute, who in recent years has grown critical of congressional Republicans. “And the lowest rates are best for the richest, since they drive the economy. Evidence is not a part of this.”
– according to a 2016 analysis by the Congressional Budget Office.

The richest one-fifth ― whose average income in 2013, the latest year available in the CBO report, was $265,000 ― paid 69 percent of all federal taxes collected by the U.S. Treasury that year.

The middle 20 percent ― whose average household income was $69,700 ― paid 9 percent of all federal taxes.

That share of the total burden worked out to an average federal tax rate of 12.8 percent in 2013, compared with 13.6 percent in 2003, 17.2 percent in 1993, and 17.5 percent in 1983 ― immediately after President Ronald Reagan’s big first-term tax cuts.

That overall tax reduction is similar to other income groups: The poorest 20 percent saw their average federal tax rate drop from 8.7 percent in 1983 to 3.3 percent in 2013. The next one-fifth of households saw their federal tax rate drop from 12.8 percent to 8.4 percent.
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Re: What should the next US tax code look like?

Unread postby careinke » Mon 17 Apr 2017, 11:32:00

vtsnowedin wrote:Careinke wrote,
1. I would start with a clean slate and eliminate ALL current taxes: Income, business, property, Social Security, FICA, all taxes.

Buy killing property taxes you move all local government functions to the Federal level so the snow plow drivers become Federal employees?


Actually, I did not mean to address local taxes at all. That would be another topic. I would prefer a small federal government with minimum Federal taxes. Sorry I was not clear on that point.
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Re: What should the next US tax code look like?

Unread postby vtsnowedin » Mon 17 Apr 2017, 18:34:52

careinke wrote:
vtsnowedin wrote:Careinke wrote,
1. I would start with a clean slate and eliminate ALL current taxes: Income, business, property, Social Security, FICA, all taxes.

Buy killing property taxes you move all local government functions to the Federal level so the snow plow drivers become Federal employees?


Actually, I did not mean to address local taxes at all. That would be another topic. I would prefer a small federal government with minimum Federal taxes. Sorry I was not clear on that point.

No problem. We are just discussing possibilities here and ideas don't have to be vetted through the CBO to have some merit and peoples language does not have to pass legal tests.
I would like a smaller Federal government as well. I would dissolve the Federal highway administration and the federal gas tax as roads are not mentioned in the Constitution so should rest with the "states or the people" and also the Department of Education for the same reason and the fact that Congress and the Federal bureaucracy has no clue about how to effectively educate children.
How to get the Federal government out of welfare and medicare now that they are in place is a problem I have no answer to. :|
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