In my brief tax proposal, I included a few changes to consider as to the way folks might be taxed on their income.
Without discussing each issue involved with the income tax system, there are two particular issues that drive some of the rationale underlying the proposal provided.
First, income tax bracket levels are inefficient. Too many young individuals and couples earning solid, yet not outrageous, incomes are paying ludicrous amounts of money in taxes. I know many wonderful folks trying to buy a home and raise children with a good education that are being inhibited by taxes.
By simplifying the system through a reduction in the number of brackets, with the highest rate not kicking in until $1 million of income, a more optimal combination of fairness and efficiency can be achieved.
Second, the rates should potentially be lowered at all (non-zero) bracket levels. Regardless of how one feels about spending, the rates on many people are quite high. Even if the highest rate were lowered to 25% at the Federal level for income earners of over $1m, their total tax bill would still be quite large when one adds in the numerous other taxes involved in one’s overall tax bill.
Two wrongs don’t make a right. If one wants to balance the books then spending/entitlement cuts may need to be made and/or other tax changes (e.g. consumption) potentially implemented. More likely, efficiency-enhancing tax reform will fuel the growth that the US could utilize to help collect more taxes from a larger base, as I am currently reminded of once again as Joe Scarborough discusses [March 10th] on Meet The Press about the budget balancing at the end of the last century.