Some Ideas for Simple Income Tax Reform
Base the rates on a figure related to the actual year-to-year economy, namely, the Per Capita Gross National Income (PCNI, also called “gross national income [GNI] per capita”). (The U.S. PCNI was $34,100 in 2002, $55,200 in 2014.)
Tax income up to twice the PCNI at 25%, the amount above twice the PCNI to 11 times the PCNI ($375,100 in 2002) at 50%, and the amount above 11 times the PCNI at 75%.
Tax business profits up to the PCNI times the number of full-time employees with a certain standard of benefits at 25%, above that to 5 times at 50%, above that at 75%. Give half of this revenue to the state or states in which the company resides.
No tax on saving! Include as income the net movement out of savings and investments. Deduct from income the net movement into savings and investments.
Standard Deduction: 0.33 PCNI for each filer, 0.125 PCNI for each dependent.
Do not allow deducting other taxes (such as state & local, real estate), home mortgage interest, or charitable donations. Do not treat inheritance, dividends, capital gains, etc. differently from other income.
Allow joint filing by any number of adults, not just married couples. This would facilitate a healthy pooling of resources, such as for care of a sick friend or relative, supporting an aged parent or associate, helping an adult child, communal living, etc.
Social Security and Medicare: Continue flat tax rate, except with the following changes. No individual payment of tax on income up to 0.50 of the PCNI. Individual payment of half the tax on income from above 0.50 PCNI to the PCNI. Employers continue to pay half of the tax for every employee. No income cap for these taxes. Benefits are not employment based but paid equally to every citizen and resident of at least 10 years. The social security benefit is equal to the PCNI.
Welfare: Guarantee an income of 0.33 PCNI. Pay this amount in full until the individual is earning 0.67 PCNI total, then gradually decrease it to zero as individual's own income approaches 0.67 PCNI.
Minimum Wage: Annual salary of 0.50 PCNI or hourly wage of 1/4000 PCNI. (This would be supplemented with welfare income of 0.17 PCNI.)