Taxes. II.

Today I shall adumbrate how the income tax system can - should - be reformed. 

Objective:  a simple, fair system understandable by all sentient human beings.

There are two rules: 

1.  ALL income (profit) is taxed at the same rate.  No deductions.
2.  Adults receive a large personal exemption, children/dependents a smaller one; both are computed to reflect reasonable costs of a simple and frugal household lifestyle.

Thus in Bunkerman's K. I. S. S. income tax system, that tax emulates a simple tax on household profits, the amounts a household has after that costs of a simple, frugal life style.

My guess:  the adult exemption would be about $20,000, the child/dependent exemption would be about $5,000. Thus the prototypical "family of four" would receive the first $50,000 without any income tax. [Don't forget, they will be paying the Bunkerman VAT, hence paying something to support the government].

No deductions means no deductions.  No deductions for mortgage interest, charity donations, medical expenses, state/local incomes taxes, property taxes ... nothing.

ALL income would be taxed EQUALLY.  That means municipal bonds, rents, capital gains, wages, business profits, pensions ... everything.

This would be the ONLY tax on anything related to incomes:  no added taxes for Social Security, Medicare, etc.  Those benefits are paid out of general revenues, which includes the VAT and estate taxes.

That's it.  Simple, understandable, doable.

Tomorrow:  the estate tax.

Future Posts:  the corporate tax and the VAT.

Word of the Day

"Disport" - verb & noun [10]
Disport means (verb, intransitive and reflexive) frolic, gambol, enjoy oneself (disported on the sand, disported themselves at sth); (noun, archaic) 1. relaxation; 2. a pastime.
Sentence:  His taxes completed, this afternoon Bunkerman intends to disport himself with a local friend at the MG range, capping off a few hundred rounds of 9mm.  That metal target is going to sound like Lionel Hampton.