5 opinions, 4 replies
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100
1 vote
Jul 23, 2015

The major reason that the IRS Code is so complex, is that our economy is so complex. The law has to cover every type of transaction and source of income. It has to cover employees, self employed, partnerships, corporations, and others. In the stock market, it has to cover puts, calls, selling short, long term, short term, wash sales, options, commodities, and whatever else I missed. It also has to cover every type of reasonable business expense.

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100
User voted No.
1 vote
Jul 23, 2015

No, it's not good, it's too complex.

Here's a simple system that would work. Income is income no matter where it comes from and thus should be subject to tax. Here's an easy system that would work. First each person files their own tax form.

The first $10,000 would be taxed at an Ultra Low Tax Rate (ULTR) 0.5 percent then from 10,000 to 75,000 would be taxed at 15 percent. then any amount about that would be taxed at 30 percent.

Children would allow you to increase the amount money taxed at the ULTR so with 2 children and one adult the first 30,000 would be taxed at 0.5 percents, also a person who has 0 income would be able to assign their 10,000 to another person.

So let's say we have three families of four, the first family makes a total 40,000 the second makes 75,000 the third 100,000 a year.

Under this plan the first family would pay 200 in federal tax. The second family would pay a total of 2,450 the third would pay a total 12,950. The whole tax form would be about 10 lines long.

Now you can play with the percentages, but under this plan everyone pays some tax, after all everyone get some benefit from the government. So it's simple, easy and would have no chance of passing congress.

edited would pay 0 in federal federal to would pay 0 in federal tax

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-2
2 votes
Jul 23, 2015

No and this is primarily because of the bloated nature of the tax code to allow for untold quantities of tax breaks and loopholes that never expire so that the rich can keep as much of their money as possible.

A simpler tax code is preferable with all tax breaks being up for renewal vote every 6 years or so.

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100
main reply
1 vote,
Jul 23, 2015

So would you agree that a flat tax rate of say 15% across the board with no deduction would be acceptable. That would be the direction I would like to see it be moved. Everyone would pay the same percentage equally everyone would have skin in the game no one would get special treatment.

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50
2 votes,
Jul 23, 2015

That is not viable for the lowest paid workers because they need more of their money to barely survive. I'd want the standard deduction to be 60-70% of the minimum wage (it's currently 40% at around 6k with 15k being MW). Additionally I'd want EITC to still exist to make having children financially viable to non-wealthy people.

I'd also still want capital gains to be lower on the tax amount for people who make less than 65k a year, probably 8% long term and 12% short term with a FTT also implemented to tax high volume, high frequency trades. The capital gains tax would instead be 12% short term and 15% long term for people making 65k+ a year because they are more likely to derive a significant portion of their wealth from investing rather than a salary. The exact numbers would need tweaking but the idea is to make investing cheaper for those taking on more risk (they have more risk if they have less money to invest).

These tax breaks would be a good place to start for a simplified tax code that would need to be some what progressive due to the simple fact that poorer people need more of their money to survive on than middle/upper class people.

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100
1 vote,
Jul 23, 2015

Now your just giving favors to the very rich and the very poor which is the problem right now. The middle class ends up with the least, as for the very poor there is nothing you can do for them but give them opportunity to move up. If you make it better to be poor then they will stay that way happy to just live on welfare and work for cash which is what many do now. Want to move America get away from trying to keep the poor poor. Its foolish to give special to different people it why the Government needs 16,000 IRS Agents.

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-1
1 vote,
Jul 23, 2015

Actually with the standard deduction set to 70% of minimum wage you have a 10.5k deduction vs the current 6k deduction. For someone making 15/hr lets say (getting pretty close to middle class, but not 100% comfortably so) their tax would be about 2k. With a 10.5k deduction that changes to 1656, s savings of $344 at the current tax amounts. This could be money in a savings or investment account that currently is going to taxes so this does improve things for the middle class to some degree.

A flat tax would double taxes on the poor so doing that is probably a bad idea because it's another method of keeping the poor poor. You necessarily need to have multiple tax brackets because the people on the lower end have to use more of their income to meet basic survival needs, pretending they don't is lying to yourself. Having multiple tax brackets doesn't mean needing 16k IRS agents, the setup I've described is pretty simple for anyone that doesn't have investments, and only slightly more complicated for them but still much simpler than now.

We don't need to help the middle class heavily when it comes to taxes because they are theoretically in a position to handle their tax burden with little to no negative effects.

We need to make the road to the middle class much smoother and easier to access and helping the poor by lessening their tax burden (only eliminating it in cases of EITC claims with children involved) is one method to do this.

This setup still does help the middle class, it offers a higher deduction and cheaper tax rates on capital gains so they have more opportunity for growth.

One additional tax break to consider would be something for property taxes. I'd consider making them tax deductible up to 70% with a cap at 8k.

The most important thing when it comes to taxes is that if people make more money they will be able to handle a higher tax burden.

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0
0 votes
Jul 23, 2015

We need a simpler system... At the local level we really should replace (with income and sales tax) the unfair school tax on a private residence.

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0
User voted No.
0 votes
Jul 24, 2015

It provides insufficient revenue for necessary government services, is too complex for the average individual to make sense of, and provides too many tax breaks for organisations and individuals who have no need for the assistance.

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