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.
Cliff (Start a rEVOLution, grow a garden)