When you think of the 20 phone books and thousands of employees that is our tax plan it is clearly regulation gone insane. But it is also a gordian knot with every special interest having some golden rule that they can’t live without. So what to do?
There is already something called the AMT or alternative minimum tax. It’s actually a extra tax used in stock calculations. We need to support this reform effort by using an AMT three ways.
First, all citizens whose gross income including investment which is under 200,000 USD for single people and 350,000 USD for married couples should have the CHOICE to chose a AT (alternative tax) simple tax calculation of 15%. They can still go through the regular tax code and deductions if they wish (yah right who will bother!) and see if they get a better deal from the existing tax code 200 hours later.
If you earned $100,000 dollars, then you would pay $15,000 in federal tax. Simple.
Now, this is a lot less than our current system which puts that person into the 32% tax bracket for some of that income. So how do we work this so our deficit doesn’t balloon.
Well there is another bigger problem which is that companies and wealthy individuals do not pay their fair share. So even though Trump is reducing tax on corporations to 15% most will still offset that with deductions and pay nothing. That is what they pay their accountants for. So we need to address that, and the same situation for high earners.
So, there should also be an alternative minimum tax of 25% for earners who earn over one million dollars a year, single or household. Again, this is lower than their current 39% rate, but you cant use deductions to get out of it.
For corporations that earn over 10 million a year in gross sales (not profit calculated) there should be a 8% AMT tax on sales. What would this mean for Google?
The current case of Google (from Forbes):
A portion of Google’s profits are paid to an Irish affiliate as royalties on its patents (which are taxed at a lower rate). To further avoid taxes, this money is then routed to the company’s Dutch subsidiary, Google Netherlands Holdings BV. From there, the company tranfers its revenue to another affiliate, Google Ireland Holdings, which is based in the notorious tax haven of Bermuda—but registered in Ireland, Reuters reports. So there you have it—double Irish with a Dutch sandwich.
The Irish government shutdown the shelter to new companies in 2015, but Google and other corporations already taking advantage of the tax break have until 2020 to make other plans.
With its latest Bermuda transfer, Google avoided paying tax on much of its foreign income, ultimately paying just 2.8 million Euros in taxes on the income—or roughly .024% in taxes on the 11.7 billion Euros in revenue.
So the horror of all this is that America gets stuck with little to no tax income. Instead with their annual revenue of 50 billion, lets say for example that 30 billion of that is US income, then their tax would be 2.4 billion. They currenty pay between 0 and 500M. So an AMT would not be that bad for Uncle Sam. This is hardly a 39% oppressive rate. Still companies will try to shift profits overseas with cost arrangement contracts. The great thing about the AMT is it is based on gross sales, not profits so this will NO LONGER WORK.
So a new simpler system for the rich, for the companies, and for the working class. What does the working poor get? How about ZERO taxes if they earn under $40,000 a year. This will make the leap off welfare possible which it isn’t now. Also, they should be allowed to start a new business and shelter that income from taxes for three years, and be able to do this once every ten years. So they can’t just do this forever. They should be taught how to make handicrafts, or sell food, or services like haircutting, to other blacks in their neighborhoods. A business idea which comes to mind is FRUIT SMOOTHIES, get them off the JUNK of deep fried chicken and get them onto HEALTH. Or with the grocery desert problem in inner city hell holes, what about a business that simply buys wholesale fruit and drives it in to a small stand. Would be very profitable. By having all that profit non taxed for 3 years would let them learn what works in business and grow it. And hopefully if they do well, they will be earning over 40k a year and start contributing taxes. Now clearly not every disability faker/welfare recipient will do this. But some will and enough will see that there is a better safer path than selling drugs and this will take off. Its just human nature to enjoy the simple fruits of productive work.
So a new tax plan that keeps the wealthy and corporations in tow, uber simplifies taxes for the middle class and reduces their taxes by almost 40%, and gives the lower class a path out of poverty. And it’s simple, yet it does not replace the existing complicated tax code, its simply an alternative choice (for the middle class).