The One Sentence Tax Code Challenge

[sandman]

So Mitt released his tax returns for the last two years, and lo and behold, he made more than $40 million and paid less than 15% in taxes. He amassed vast wealth when he worked for Bain and ever since then that wealth has been generating more wealth without the slightest bit of effort on his part. Mitt is utterly unapologetic about this, saying "I will not apologize for being successful" and "I paid every dime in taxes I owed and not a penny more." Gee, Mitt, that's nice, but you, and everyone else, is missing the damn point.

The point is that the system is broken. The current tax code is designed so that if you have a lot of money, you can use that money to generate even more money exponentially, and this new money is taxed at a significantly lower level than any other form of income. But the only way to access this is to already have vast wealth to start with. Now, the system was originally intended to stimulate investment, growth, and innovation, and it probably did that at first. Now the only real practical effect of the system is to allow the wealthy access to special rules that make them more and more wealthy, ever widening the gap between the haves and the have-nots. And since there is only a finite amount of wealth to go around, as the rich get richer, everyone else gets poorer. Which is great if you happen to be rich, but it sucks balls if you don't, because it has become an essentially closed system.

The challenge here is to re-write the tax code into a single sentence. It can be a compound-complex sentence, but no run-on sentences allowed. You may write a brief explanation of your one-sentence tax code following your proposal. Please place your one-sentence tax code at the top of your response in bold, skip a line or two, then add an explanation if you so choose.

[sandman]

The first $200,000 of earned income shall be exempt from taxation with all income over that taxed at a flat 50% rate.


I know it's overly simplistic, but under this system, Mitt would still have made more than $20 million over the last two years. He would still be incredibly wealthy. Newt would have still made more than $1.5 million over the same time period and he would still be very rich. None of the rich will suddenly become poor, but the average schmuck on the street would see their income jump by between $3,000 and $10,000 a year. And since the only way to stimulate a consumer economy is to get money in the hands of people who actually spend it....that would stimulate the economy.

[DasFuchs]

The first $200,000 of earned income shall be exempt from taxation with all income over that taxed at a flat 50% rate.


I know it's overly simplistic, but under this system, Mitt would still have made more than $20 million over the last two years. He would still be incredibly wealthy. Newt would have still made more than $1.5 million over the same time period and he would still be very rich. None of the rich will suddenly become poor, but the average schmuck on the street would see their income jump by between $3,000 and $10,000 a year. And since the only way to stimulate a consumer economy is to get money in the hands of people who actually spend it....that would stimulate the economy.

Which you'll never see happen. The'll just scream "trickle down economics" or some such and continue hoarding wealth.

[armandtanzarian]

The thing is, I can't make it in one sentence. Hell I can't even make one in one page, or 10 pages. The mathematical savant in mine prevents simplicity, but also I recognize some of the credits and benefits in there are put there for a reason. To start with, what is "earned income"? As opposed to unearned? Can I call capital gains unearned, and thus untaxed? And we're back to where we started.

Every tax code needs to start with a progressive tax base. No one earning below the poverty line should pay income or payroll taxes, and the floor on taxes on retirement funds should be kept lower than the standard cap gains. There should be credits on items like children, books, education, and other things we know to assist the family in making a better life. A simplistic tax code will remove many of these basic things that shield poor families, and much more. Simplification of the tax code in this case is a bald conservative ruse to eliminate most of the benefits given to poor people via the tax system.

The other side, however is where the "benefits" need to be reviewed and/or eliminated. The biggest problem with Romney's tax rate is cap gains; He earns  almost 75% of his income through investments, as do most successful businessmen and affluent people, and are taxed at only 15%. A significant number are from blind trusts, which Romney has no control over, but are making money anyway. He makes money in his sleep, basically. In addition to that, he gets a small amount in foreign tax credit. The actual amount of earnings through wages (and thus taxed at a schedule similar to us average wageslaves)? Zero. Because even his speaking fees are run through corporations, he himself escapes most of the tax through loopholes. And I'm not even pointing out the loopholes for corporations (see: GE's 0% tax rate). It is the top end of the tax code that needs simplifying, cutting, to a point where at least, the millionaires don't pay a tax rate lower than the guy working in middle management.

[Auri-El]

Taxes on income will be done away with; all purchases of non-essential items will be subject to a tax rate of 40%, non-essential items meaning things not necessary for survival (food, clothes, houses under $70,000, basic transportation, etc., would be considered essential and therefore not taxed, houses over $70,000 and second homes, luxury cars, jewelry, yachts, plane tickets, etc., would be non-essential).

[Vene]

Taxes on income will be done away with; all purchases of non-essential items will be subject to a tax rate of 40%, non-essential items meaning things not necessary for survival (food, clothes, houses under $70,000, basic transportation, etc., would be considered essential and therefore not taxed, houses over $70,000 and second homes, luxury cars, jewelry, yachts, plane tickets, etc., would be non-essential).

That's a fantastic way to kill the middle class and do absolutely nothing to the very rich.

[Auri-El]

Um, last I knew, the middle class wasn't buying luxury cars and yachts, the rich were.

[Yla]

The middle class is buying plane tickets, for example.

[Vene]

Um, last I knew, the middle class wasn't buying luxury cars and yachts, the rich were.

The middle class buys a lot of things that are not strictly necessary to survival*. A home under $70,000 is not an expensive house. The middle class spends a fair bit of their money on luxuries so they would eat quite a tax burden. Whereas even if the rich spend more on luxuries on an absolute scale, it's not so much when you view it as a proportion of income. Finally, what that tax code would do is absolutely kill demand and mean there would not be jobs because people would not buy shit due to wanting to avoid taxation. Do you know why unemployment is so high right now? It's due to a lack of demand for goods and services.

ETA: One thing I just thought of, companies. Your tax code completely ignores them and they can claim everything they buy is essential for day to day operations. They will thank you for freeing them of taxation completely.

*One such example is my parents owning a motorboat and a 5th wheel camper and live in a house that cost >$100k 10 years ago . Wanna know what they do for a living? My mother teaches elementary school and my father works for a car dealership and sells used parts. My aunt and uncle have similar luxuries; my aunt is a nurse and my uncle is a custodian for a school system. If you want to call them rich, feel free, but that would be asinine.

[rookie]

Hmm. A fun thought. Ok. Well, then, let me see what I can do. This will be personal taxes. I don't see how I can fit corporate taxes, 501(c)s, or anything else into one sentence, no matter how complex.

Every dollar made between $20,000-$40,000 will be taxed 6%, $40,000.01-$60,000 will be taxed 9%, and so on with another three percent added to every $20,000 until the maximum rate of 38%

First of all, the percentages were pulled out of my ass. I have no idea how much it would take to keep the wheels of the United States turning. But I think the principle would still apply. So, in the Rookie Tax Plan, someone making, say, $50,000 a year, the taxes would break down thusly. The first $20k would not be taxed. Dollars $20k-$40k would be hit with six percent. The remaining $10k would be 9%. I know, it's very simplistic and probably bad for, well, everyone. But I am not an economist or accountant.

[Auri-El]

Fine, point taken.

[Smurfette Principle]

Those making at or below a living wage (to be reevaluated each year to adjust for inflation and prices of food and whatnot) shall pay no income taxes. Just above that line to lower middle class pay 5% income tax, middle to upper middle (and small businesses) pay 10%, and the wealthy and corporations pay 20%; in addition, investment gains, inheritances, and other "unearned" money (money that was not actually earned by the beneficiary) shall have a flat 7% tax.

I have no concept of tax brackets or what "middle class" actually is, and the percentages are also pulled out of my ass, but I think the concept is clear enough?

[erictheblue]

(snipped)

middle to upper middle (and small businesses) pay 10%, and the wealthy and corporations pay 20%; in addition, investment gains, inheritances, and other "unearned" money (money that was not actually earned by the beneficiary) shall have a flat 7% tax.

Corporations can be small businesses. All it takes to be a corporation is to file the proper paperwork with your state. So if two people want to incorporate their computer repair service, they can. The entire corporation is the two of them, but they are a corporation.

[m52nickerson]

All gross personal income and net business profits shall be taxed at an increasing rate of 0.5% per $10,000 with caps of 75% and 25% respectively.

That would put the tax rate for a person, or family making $30,000 per year at 1.5% and a person making a $1 million at 50%.

Businesses get a much lower cap because the effective corporate tax rate is much lower now; this would be an increase for most, but spare smaller businesses.

[sandman]

That's very interesting m52n. I like yours better than mine.