Our own tax simplification.

[greenohio]

Remember shrubs bonehead ideas on tax simplification. Most of them benefit the rich by tinkering only with the federal income tax.

We pay two taxes based on income to the federal govt: the payroll tax and the federal income tax. One of the things I hate about the tax system is the way the little guy gets screwed on the payroll taxes. Payroll taxes are regressive. They are capped at about 90k while deductions and credits do not apply, to a point where the middle and lower income people pay MORE in payroll taxes than in federal income taxes. This system allows the repukes to claim that the poor pay little to no income tax, when in reality they are paying plenty in payroll taxes.

Maybe we should have one tax, without a cap based on income. This way we can remove the cap in the name of tax simplification and allow credits and deductions from payroll taxes. Done properly, it could be done in a way that is revenue neutral, or even positive, with the burden shifted off of the poor to those who can afford to pay more.

What do you all think?

[benburch]

1. Flat tax taxes the poor.

What we need is a return to the tax rates we had right after Kennedy changed the tax code.

[greenohio]

2. I would prefer no taxes for the poor.

What were the kennedy rates, both payroll and fed income?

[anewdeal]

5. Flat tax taxes everyone

equally

[1932]

6. Those pre-K rates were not appropriate for 60s. They were appropriate for

the 40s and 50s when wealth was really easy to create, especially if you had a lot of money (and they didn't stop anyone from receiving the value of their work). By the 60s, the economy had slowed down and those rates didn't match the reality of the income levels at which it was easy and hard to accumulate wealth -- and they were become very flat for upper income earners, despite the fact that within that bracket there was a lot of difference in experiences of wealth within that bracket.

The rates need to be progressive throughout the entire broad range of income experiences, and they also need to match today's economy. With some people making 10M, 100M a year and even 400M or more a year on capital gains taxed at 15%, we need to adjust the tax code to capture those experiences of wealth in way that is more fair to all taxpayers.

BTW, the Eisenhower-era tax code had so many loopholes that nobody really paid those rates.

[benburch]

10. That's why I said the POST-K tax rates. nt

[1932]

13. No rates in the 60s are appropriate for the economy now.

That's my point. The economy changes.

[Ravy]

3. I agree.

Also, to cut some of the "bracket" games yet still make the tax progressive, I would look at a progresive type of flat tax, if that term makes any sense.

Something like nothing on the first 30k, 15% of the next 30k, 20% of the next 100k, 25$ on the next 250k, etc. I have never seen anyone draw up this sort of tax, but I think it would be progressive and fair.

Right now, you essentially pay the percentage of the tax you pay from the first taxable dollar you earn, leading people to play games to fit into a lower tax bracket.

[phiddle]

4. We're partway there;

see Sen. Ron Wyden (D-OR)'s web page. In what seems to me to be a very progressive measure, he has drafted legislation which would:
1. Expand the definition of income to include all dividend, interest and cap gains income not deriving from governmental sources, i.e., govt. bonds. NB: the complexity in the tax code has more to do with the definitions of income than with tax rates. Currently dividend, interest and cap gains tax is capped at 10% while us poor schlepps who work for a living pay much higher rates on our salaries.
2. Use the expanded income pool so derived to vastly expand the standard deduction (to $26,500 for head of household, and $15,000 for all others), while retaining popular middle class deductions such as mortgage interest, IRA contributions, educational and medical expenses, and for the first time, including a deduction for state and local taxes paid.
3. Reduce the tax rates to 3 : 15% on the first $25,000 of taxable income (that isa, income minus deductions), 25% on TI from 25-120K, and 35% on TI over 122,000.
4. Reduce the income tax burden on virtually all taxpayers with $150,000 SALARY income or less, while reducing the deficit (according to the Congressional Budget Office) by $100,000,000 per year.

I think that you're right, that 'simplification" should consider the FICA taxes, and also that progressives should own the issue.

Along the lines of your idea, since FICA (soc security + medicare) taxes are paid only on the first $94,000 of taxable income, I would like to see a 15.3% "Fica-Equivalent Supplementary Surcharge" applied to all TI above 94 K. If the rich were thusly asked to "FESS" up, it might be possible to reduce the above 3 rates to one, tinkering with the deductibles and percentages to make the numbers work out.

[primative1]

7. Roll back everything to FY2000

The last 6 years were just a bad dream. Thats my tax plan. Do I hear a second?

[greenohio]

8. Lets shoot for more.

Though I agree with your thoughts, I would rather work towards something more. I just don't want to undo the mess shrub has made, I want to work towards actual simplification. Right now we have 2 tax systems allowing for repuke double speak. Lets get it down to one. Combine FICA and the income tax into one, have one set of rates, no caps.

[primative1]

9. Hmm ...

Kind of hard to think more expansivly in this environment. At this point I'd be happy to get to throw a brick, but maybe someday soon such discussions can take place :)

[greenohio]

11. I think in order to win

we need to offer solutions that can't be pegged as something just to undo what the repukes do. I would rather say, lets combine the two taxes, remove the cap, and reduce overall rates for the poor. It just want to move forward with progressive solutions.

[primative1]

12. You are probably correct ..

But to much time has elapsed for me to think rationaly. My mind has melted. I just want to throw BRICKS .... Yee-haa :)

[cpamomfromtexas]

14. They'll just incorporate and declare dividends to get around it!