The Citizens of America's Tax Plan

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The Citizens of America's Tax Plan

This group is about how American Citizens can come up with a fair tax system for America. Looking for ideas and comments to this issue, so lets build a plan together.

Members: 18
Latest Activity: Dec 11, 2014

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Comment by Sensible Sailor on December 5, 2014 at 11:30pm

I’m intrigued by Keith’s ‘Buy American’ idea but am opposed to including it as a tax deductible.

I think we need to resist the temptation to use taxes as a means to shape policy. This is part of the reason we’ve gotten ourselves into the pickle we are in now and have whole library sections dedicated to tax laws and their associated loopholes.

The problem with tax deductibles, rebates, credits, etc. is twofold. The initial problem is that once a tax is in place that is supposed to minimize or deter someone’s use of something (say cigarettes), the incentive for the government to support the health of the people and continue to legislate against it is undermined because the government is now benefiting from the sales of said product. It becomes a conflict of interest.  The second issue is that it is hard to predict and plan budgets utilizing a tax that, by its very design, is meant to decrease over time.

Using money to incentivize industries and sway people’s choices tends to be very effective, I think there is still a place for such programs, but I believe it should be finite, have set parameters, and above all be distinct and separate from taxes and the funding of government.

Comment by Sensible Sailor on December 11, 2014 at 9:22pm

One of corporate America's biggest gripes is the relatively high tax rates on business here in America (35%). Not that any company (or hardly any company) actually pays that amount what with all the assorted tax breaks, deductions, loopholes, etc. Just look at GE paying absolutely no taxes and in fact claiming a 3.2 Billion dollar tax benefit back in 2010, even though they earned over 5 Billion stateside and over 14 Billion worldwide. (NY Times) 

http://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagew...

I think we should just throw out the whole corporate tax structure, kitchen sink and all and start with something new. Corporate taxes in their current form are riddled with years of meddling and poor attempts at trying to direct economic/environmental policies by affecting companies’ bottom lines.

My suggestion is that we replace the current system with a VAT based system. We then tie the amount a company is required to pay to their earnings reports. Companies, especially shareholder based ones, aren’t going to want to meddle with the numbers that inspire investor confidence on Wall Street.

I recommend this VAT system be based on a flat tax % and be calculated off gross sales. Many companies plow their earnings back into their business in order to expand and a tax rate that increases with earnings might dissuade companies from expanding/modernizing/becoming more efficient.  A flat tax based on sales will also make calculating and forecasting taxes owed very easy, thereby reducing overhead on everything from tax professionals and lawyers to lobbyists.

I still believe there is a place for the government to offer monetary incentives to influence corporate decision-making on labor and environmental issues, but I think it should be completely separate from tax policy and the funding of government. Much in the same way that small towns ought not to base their budget on traffic tickets and fines, neither should our federal government budget be subject to how well (or poorly) a company is at meeting certain labor/environmental wickets.

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