Tax Reform One Pager
Attachment - Tax Reform
Individual payroll taxes will continue to fund Old Age benefits and survivors’ insurance for retired spouses. This retains a link between salary level and benefits. A floor of $20,000 per year eliminates the need to file a separate EITC, along with an increased minimum wage. A ceiling of $75,000 per year reduces benefits for upper-income individuals. With an asset VAT, post-retirement income tax filing is eliminated.
Invoice Value-Added/Goods and services taxes (I-VAT) fund discretionary military in the continental U.S., discretionary civil spending and entitlement spending that cannot be transferred to an employer paid tax credit, including the employer contribution OASDI for existing retirees, a subsidized public option or single-payer catastrophic. Employer OASI and DI contributions would be credited on an equal dollar basis, rather than linked to income. I-VAT would be zero rated for exports and fully burdened on imports. The latter could also be funded by the asset VAT (decreasing the rate by from 19.5% to 13%).
Carbon VAT (C-VAT) provides more visibility than a carbon tax, so that consumers can make more informed choices about their carbon footprint. It would replace fuel taxes and fund environmental research and enforcement, mass transit and infrastructure.
Subtraction value added taxes (S-VAT) are a non-border adjustable vehicle to distribute tax benefits to employees and their families, including an expanded refundable child credit distributed with pay; health insurance for workers and retirees, savings accounts and Tri-care; stipends and tuition from ESL to grade 14; and personal retirement accounts credited on an equal dollar basis, holding shares of employer voting and preferred stock and an insurance fund holding stock in all such firms. TANF/SNAP programs will be eliminated
High Salary Surtaxes above an individual standard deduction of $75,000 per year, with rates from 6% to 36%. Surtax, multi-tier S-VAT and A-VAT fund net interest, redemption of FICA Trust Funds, strategic, sea and non-continental U.S. military deployments, veterans’ health benefits for battlefield injuries, and further debt reduction. A multi-tier S-VAT could replace surtaxes in the same range. Transferring OASDI employer funding from existing payroll taxes would increase the rate but would allow it to decline over time. So would peace.
Asset Value-Added Tax (A-VAT) at 24% or 20% of price replaces individual filing on income from capital gains taxes, stock option exercise, rental property, estates and gifts, dividends, pass-through income and interest. Taxes are collected at sale or distribution. Sales to qualified broad based ESOPs remain zero-rated. Payments for option exercise, inherited and gifted assets will be at market rate with no credit for prior taxation.
Before rates are adjusted, Table 3 allows us to look at how collections might be impacted by these proposals. Salaries and wages for 70% of taxpayers would go away and, with FICA taxes, be collected through the I-VAT, C-VAT and S-VAT. The top $5 trillion in salary would be subject to income tax. The bottom $2.5 trillion in salary and wages would be shifted. The A-VAT pick up taxation of interest ($105.7 billion), ordinary dividends ($215.5 billion), capital gains subject to preferential rates ($992.4 billion) and pass-through taxes from partnerships and Chapter S corporations ($832.6 billion). Add 3% to the rates paid on this income (14% tax increase).
Individual payroll taxes will continue to fund Old Age benefits and survivors’ insurance for retired spouses. This retains a link between salary level and benefits. A floor of $20,000 per year eliminates the need to file a separate EITC, along with an increased minimum wage. A ceiling of $75,000 per year reduces benefits for upper-income individuals. With an asset VAT, post-retirement income tax filing is eliminated.
Invoice Value-Added/Goods and services taxes (I-VAT) fund discretionary military in the continental U.S., discretionary civil spending and entitlement spending that cannot be transferred to an employer paid tax credit, including the employer contribution OASDI for existing retirees, a subsidized public option or single-payer catastrophic. Employer OASI and DI contributions would be credited on an equal dollar basis, rather than linked to income. I-VAT would be zero rated for exports and fully burdened on imports. The latter could also be funded by the asset VAT (decreasing the rate by from 19.5% to 13%).
Carbon VAT (C-VAT) provides more visibility than a carbon tax, so that consumers can make more informed choices about their carbon footprint. It would replace fuel taxes and fund environmental research and enforcement, mass transit and infrastructure.
Subtraction value added taxes (S-VAT) are a non-border adjustable vehicle to distribute tax benefits to employees and their families, including an expanded refundable child credit distributed with pay; health insurance for workers and retirees, savings accounts and Tri-care; stipends and tuition from ESL to grade 14; and personal retirement accounts credited on an equal dollar basis, holding shares of employer voting and preferred stock and an insurance fund holding stock in all such firms. TANF/SNAP programs will be eliminated
High Salary Surtaxes above an individual standard deduction of $75,000 per year, with rates from 6% to 36%. Surtax, multi-tier S-VAT and A-VAT fund net interest, redemption of FICA Trust Funds, strategic, sea and non-continental U.S. military deployments, veterans’ health benefits for battlefield injuries, and further debt reduction. A multi-tier S-VAT could replace surtaxes in the same range. Transferring OASDI employer funding from existing payroll taxes would increase the rate but would allow it to decline over time. So would peace.
Asset Value-Added Tax (A-VAT) at 24% or 20% of price replaces individual filing on income from capital gains taxes, stock option exercise, rental property, estates and gifts, dividends, pass-through income and interest. Taxes are collected at sale or distribution. Sales to qualified broad based ESOPs remain zero-rated. Payments for option exercise, inherited and gifted assets will be at market rate with no credit for prior taxation.
Before rates are adjusted, Table 3 allows us to look at how collections might be impacted by these proposals. Salaries and wages for 70% of taxpayers would go away and, with FICA taxes, be collected through the I-VAT, C-VAT and S-VAT. The top $5 trillion in salary would be subject to income tax. The bottom $2.5 trillion in salary and wages would be shifted. The A-VAT pick up taxation of interest ($105.7 billion), ordinary dividends ($215.5 billion), capital gains subject to preferential rates ($992.4 billion) and pass-through taxes from partnerships and Chapter S corporations ($832.6 billion). Add 3% to the rates paid on this income (14% tax increase).
posted by Michael Bindner at 2:27 PM
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