What tax system should America adopt?

[BrentWil]

Simple question with many different answers. You have a chance to totally resign the American tax system. What does it look like and how does it work?

[customerserviceguy]

1. Property tax system

There are only three things that can be taxed:

1) Consumption. That manifests itself as either a sales tax or a value added tax, and it impacts the poor the most.

2) Income. The papers needed to file for that type of tax are all secret, surely we know that Mitt Romney thought it would be more damaging to his campaign to reveal his tax forms than to make them public, as his father famously did.

3) Property that is registered. The present real property tax system is open, you can find out exactly what any of your neighbors has, what it's valued at, and what tax they're paying, it's completely transparent. Such a tax also is not a hardship on the poor.

Of course, there are use taxes that impact when a person uses a government service, but other than postage and park entry fees, it's difficult to apply.

[BrentWil]

2. Not really...

One could tax wealth. (Have 1 million in the bank account.. the government will take 2.5 percent) Also, passive income is also taxed (capital gains)

[customerserviceguy]

7. I feel I've already covered that under #3

It's a matter of what property we choose to identify and tax. Money has a tendancy to slip to place where it isn't seen and taxed, whereas real estate (and large pieces of personal property) don't.

As for passive income, I feel I covered that under #2, I wasn't distinguishing the source of income.

[Taitertots]

5. Property taxes are horribly regressive

They accelerate the stratification of society that prevents economic mobility and increases economic inequality. It is a scheme to prevent the poor from being able to penetrate the high property tax areas occupied by wealthier people.

[customerserviceguy]

8. Then I suppose you favor one of the other two sources?

I can't imagine that you're in favor of consumption taxes, so you like the whole secret income tax thing?

[Taitertots]

11. It is almost like you read the post directly below this one...

Where I just said the only source of income for the government should be a progressive marginal income tax.

Secret income tax... Who are we keeping it a secret from?

[Taitertots]

3. There should only be one income source for the government... Income taxation

And it should be a progressive marginal tax rate.

All other taxes are simply schemes to implement regressive tax structures on the American people.

[BrentWil]

4. I will go...

I favor a reverse income tax. If you make up to 50K a year, the government would simply credit you with an amount a year on your pay check. Once you make over 50K, the government starts to take this money back until your income reaches over 125K. Over that amount, you are taxed on all your income at the same rate.

The tax rate and amount of income credited should be controlled by the federal reserve. In times of plenty, taxes should go up and the amount given should go down. In an economic downturn, the opposite. It would be a build in means to control economic downturns in this country and maintain economic stability.

[taught_me_patience]

6. Simplify - lower rates and no deductions

add a national VAT of 5-10% that is included in the final retail price.

[Sancho]

9. VAT ...

and more tariffs on imports.

[madokie]

10. What we had with Ike

[FreeJoe]

12. Consumption

I'd like a progressive consumption tax. I'm not sure that we are quite in a position to implement it, but I think it would be the best way to go.

How could we have a progressive consumption tax? Well, given that the overwhelming majority of transactions, particularly those over $20 are already recorded in the banking system, we could add a federal reporting requirement. Once a person has spent over X amount in a year, we could start taxing their consumption.

Another option would be to just tax all consumption but to send everyone a flat consumption tax rebate every year or month. Let's say that we set the consumption tax at 20% of all money spent. Assume that we don't want people spending below $50,000/year to pay the tax. In that case, we want to rebate $10,000 to everyone each year, so send everyone a check for $833/month but apply the 20% consumption tax to everything people buy.

I've got no problem with people earning a lot of money. If they invest it in our economy or donate it to charity, that's great. When they start to consume above a reasonable amount, I think we should tax that extra consumption.