A flat 5% rate ON ALL INCOME. Earned, unearned, dividends, capital gain, muni bond, treasuries.
A $10,000 personal exemption. $20,000 per couple.
A 10% tax on all earned income above that.
The first $100,000 of dividends and investment income is tax free. After that, investment income is at the same rate as earned income.
This encourages everyone to save for their own retirement and will sharply reduce the reliance on social security which will become means tested. This will bring social security costs into line.
This can replace all the IRAs, 401ks and retirement accounts, while relieving Social Security.
This limits the carried interest deductions and make them available to all.
No deductions. No mortgage interest deductions, property tax and state tax deductions. And no charity deductions. This last one is hard to swallow, but the more I debate it the more I come back to it. Charity will be the result of virtue, not tax policy.
I would also tax all contributions to foundations at 5%. Once in this foundation it will never be taxed again. Estate taxes are 5%. Period. Let’s stop the waste of resources to avert estate taxes. Make it low enough that such strategies are not worth it. There will a lot of tax professionals looking for work. All income should be taxed once. It should not be avoided by donating it to a foundation.
This is an ideal, but ideals are important. It lets you know if you are moving in the right direction.