Thursday, May 5, 2011

Taxes again

I noticed this post advocating a cap on tax deductions.  I think it's a pretty interesting compromise between the current system and the system I've proposed previously.  If only they could manage to fit in the domestic purchase deduction.  Ideal tax code in a nutshell:

1. stepped income tax brackets as per usual, with no exceptions for capital gains or inheritance... Any money you recieve counts as income, period.
2. all domestic purchases tax deductible

HOLY CRAP I JUST HAD A COOL IDEA.  I just realized that we can combine 2 with a flat tax and make everyone go crazy.  Here's how it works:  Flat tax of X%. You're only taxed on money you make but don't spend on domestic goods and services.  Poor people would still pay basically no taxes as their incomes are almost entirely devoted to making ends meet, and rich people would have effective tax rates fairly close to X because they rarely manage to spend a significant proportion of their income in a given year.  We might want to include a tax deduction for savings up to a certain absolute dollar amount (say 10k a year) to add some stability to the system, but that's the only other deduction.  This is a great political compromise as it tricks conservatives into accepting a highly redistributive tax and tricks liberals into accepting a flat tax.  VICTORY!

P.S. Yes, tricking politicians into doing something is basically the only way to achieve victory in modern American politics.

No comments:

Post a Comment