Summary
In "Options for Tax Reform," Chris Edwards of the Cato Institute condemns the complexity and inefficiency of the current tax code. He suggests a flat tax of 15% for most Americans. Edwards says that reform goals should include providing "greater tax visibility so that people can measure the cost of government, and maximization of privacy and civil liberties." He describes his proposal as a compromise between the flat tax and sales tax plans.
Original source:
http://www.accountingweb.com/cgi-bin/item.cgi?id=100580&d=815&h=817&f=816&dateformat=%25B%20%25e,%20%25Y
Details
As the President's Advisory Panel on Federal Tax Reform begins meeting this week to discuss revamping the current tax code, a new Cato Institute study proposes a simpler alternative that would have most Americans paying just 15 percent.
In "Options for Tax Reform," Cato Institute director of tax policy studies Chris Edwards addresses the unnecessary complexity and inefficiency of the present system and adds that the new tax code needs to reduce the size of government.
"The corporate income tax and half of the 15.3 percent payroll tax create large hidden burdens on individuals," he writes.
Edwards suggests a "dual-rate income tax," which he describes as a middle-of-the-road compromise between the well-known flat tax and sales tax plans.
"This revenue-neutral option would convert the individual income tax to a two-rate system that eliminates most deductions and credits and allows nearly all families to pay tax at a low 15 percent rate," he writes.
"A 27 percent rate would kick in for earnings above $90,000 (single) and $180,000 (married)."
Dividends, interest and capital gains would be taxed from 35 percent to 15 percent maximum to promote growth and investment.
The standard deduction would remain the same, but personal exemption would be increased from $3,200 to $4,500.
Earned income tax credit and saving vehicles (such as IRAs) would be retained, but all other deductions and credits would be eliminated.
Edwards argues that the corporate tax rate should "be dropped to 15 percent and interest made nondeductible.
These changes would equalize and cut the combined top income and payroll
tax rates on wages, dividends, interest, and small business income to just under 30 percent, compared with between 35 and 45 percent under current law."
About the author: Mike Adams is an award-winning journalist and holistic nutritionist with a mission to teach personal and planetary health to the public He has authored and published thousands of articles, interviews, consumers guides, and books on topics like health and the environment, and he has authored and published several downloadable personal preparedness courses including a downloadable course focused on safety and self defense. Adams is an independent journalist with strong ethics who does not get paid to write articles about any product or company. In 2010, Adams launched TV.NaturalNews.com, a natural health video site featuring videos on holistic health and green living. He also launched an online retailer of environmentally-friendly products (BetterLifeGoods.com) and uses a portion of its profits to help fund non-profit endeavors. He's also a successful software entrepreneur, having founded a well known email marketing software company whose technology currently powers the NaturalNews email newsletters. Adams volunteers his time to serve as the executive director of the Consumer Wellness Center, a 501(c)3 non-profit organization, and practices nature photography, Capoeira, martial arts and organic gardening. He's also author a large number of health books offered by Truth Publishing and is the creator of numerous reference website including NaturalPedia.com and the free downloadable Honest Food Guide. His websites also include the free reference sites HerbReference.com and HealingFoodReference.com. Adams believes in free speech, free access to nutritional supplements and the innate healing ability of the human body. Known on the 'net as 'the Health Ranger,' Adams shares his ethics, mission statements and personal health statistics at www.HealthRanger.org
Have comments on this article? Post them here:
people have commented on this article.