Time for the 0–10–100 Tax : No deductions, 10 percent on income, every person and corporation pays.

nat review ^ | 1/12/15 | d murdock

[bestintxas]

Under the new GOP Congress, the future looks bright for fundamental tax reform. So Republicans and thinking Democrats should embrace my modest proposal: The 0–10–100 Tax Plan.

“0” is the number of deductions that would be allowed: Zero. The home-mortgage deduction? Gone. Business-dinner write-offs? Kaput. Charitable deductions? Sayonara.

As soon as we permit one exemption, then we must include a second. And then a third. Americans quickly would become freshly mired in the unfathomable bog that governs taxes today. The best way to handle the 73,954-page U.S. Tax Code is to go Nagasaki on it: Every loophole left behind.

“10” is the flat-tax rate on gross income. What did you make in 2014? Send 10 percent to Washington, D.C. Period. See you next year.

The 10 percent rate applies to income, regardless of source. So wages, speaking fees, capital gains, dividends, royalties, stock sales, gifts, and gambling winnings would face a 10 percent tax in the year that the income is received. Estate income would endure a 10 percent death tax, from dollar one. While I know any death tax will annoy my fellow supply-siders, we live in a world of tradeoffs. Oxen must be gored from Left to Right to make this work.

[shove_it]

I’m for it, provided tax day is changed from April 15 to the first Tuesday in November and declare that day a holiday.

[minnesota_bound]

If the people have more of their money to spend they will there by generating more sales tax money. The gov’t would be awash in cash... at least until the next year when they had spent all the surplus already and start crying out for more tax money.

[PapaBear3625]

And no exceptions whatsoever. Not for 501(c) "non-profits", not for "charitable foundations", not for private universities, not even for churches.

For the case of churches and non-profits, as long as they spend their donations that same year on their proper activities, then there will be no profit to tax. There would just be tax on increase in endowment funds.

[Poser]

Lowering the corporate rates from over 40% to 10% would cut revenue overall. Additionally, corporations can move offshore.

Here’s the math on taxes:
2013 GDP: 16.8 Trillion Dollars
2013 Federal Government spending: 3.5 Trillion Dollars
2013 Gvt. spending as a percent of GDP: 20.83 percent

The absolute tax rate on every dollar of economic activity in the US would have to be 20.8% to balance the budget.

Perhaps the rate can be lowered a bit by double taxing dividends. Ten percent is a pipe dream.

[ExTxMarine]

...then there will be no profit to tax.

He didn't say tax "profits." He said to tax ALL income!

Those are two very different things!

[PapaBear3625]

It would have to be about 17% at current spending levels. 10% won’t generate enough revenue.

You have it backwards. If the revenue is not "enough", then cut spending. Eliminate the entire welfare state, and 10% will be plenty to finance the government's legitimate functions as laid out in the Constitution.

[FirstFlaBn]

Let’s say you have a magic wand and use it - poof! - to enact this tax plan exactly as written.

Within 15 minutes, lawmakers would be filing bills to create an exemption/loophole for their lobbyist clients. A logrolling Olympics would ensue - the result perhaps worse than what we have now. It’s too late.

[The_Reader_David]

This is politically infeasible: the definition of income must include deducting costs from revenues (if it doesn’t, this proposal is even more destructive of small business than the current tax regime), and that already opens the door to deductions, since the nuances of what costs are really costs of generating income will become a political football and a lot of the electorate will see businesses and business owners as still getting “deductions” while theirs have evaporated.

The destruction wrought on non-state civil society by the abolition of the charitable contribution deduction is also not to be discounted.

[thackney]

In businesses, income can refer to a company’s remaining revenues after all expenses and taxes have been paid.

http://www.investopedia.com/terms/i/income.asp

Income is not revenue.

[Poser]

“You have it backwards. If the revenue is not “enough”, then cut spending.”

You are preaching to the choir. The numbers make it painfully clear that federal spending is out of control. I fear that nothing short of a constitutional convention will solve this problem. I’m not optimistic.

[SunkenCiv]

Nah. One personal exemption -- worth $30,000 -- flat 10 percent income tax; $10/bbl tax on petroleum imports and exports; 2 percent federal sales tax (not on food, and that would not include junk food).

[Beagle8U]

I could agree with this with one modification, and I ‘ll explain the reason for that.

The modification would be a personal exemption on earnings/income equal to poverty level. Today that is about $12,000.

The reason is it makes no sense to take 10% of a poverty level income, and then turn around and give it back in welfare, which is what would happen. All that would do is grow government with thousands of new welfare case workers.

So one $12K deduction for everyone from the burger flipper to Bill Gates, and 10% of every dime over that. Married, single, 10 kids or none at all, just that one deduction.

[Vermont Lt]

You only ever paid taxes on income. Income is not revenue.

[ExTxMarine]

So, exceptions for businesses ARE allowed - the costs to generate revenue such as mortgages, building improvements, etc...!

But, to the average American, they are just going to get screwed at a flat 10% - regardless of their need and necessity to have a mortgage, make building improvements, etc...!

Once again, we are opening the door to loopholes, interpretations, and other ways to avoid taxes and allow the government to once again start building a million-page tax code - one lobbyist at a time.

[Kit cat]

It seems to me that if you spend 120K to make 100K in SALES then you are negative 20K there for you have NO income and would owe NO taxes am I missing something here? The tax would be on your income, NOT your sales!!!!!

[bgill]

All those exemptions are unfair to the rest of us. I’m being penalized for paying off my mortgage early and staying on budget not owing anyone. Why should I have to foot the bill for wining, dining and hiring the after dinner evening entertainment for supposed “business”, wink-wink, expenses? I have to disagree with death taxes as they’ve already been taxed.

[Mouton]

I have begun the gruesome yearly debacle, putting together our ITR. So, I pull out my files going back to my first ITR, 1963 at which time I made the priestly sum of about $1.5K working part time at minimum wage while attending college. Know what, I PAID income tax...after exemptions and standard deductions, I owed because the tax began at dollar $1 on TI. There were no child, unearned income, education or gabbadegots other credits and bennies.

Good for me then, good for everyone today.

[azcap]

This is written by someone who must never have owned or probably even worked at a management (see how it works) level in any kind of business. Applying these ideas to the Individual income tax is fine but applying a Gross (not net) income tax to business would destroy millions of US businesses and 10s of millions of jobs. This idea sounds like the typical pap that liberals spout about business. Millions of US businesses operate with net profits well under 10% of their gross income. You are basically saying to these businesses that they are finished and you will wipe them out. Applying some kind of flat tax to everyone is great idea. Everyone paying taxes is a great idea. But his understanding of how business works and how you tax it is childish. You can’t deduct payroll?? Absolutely ignorant.

[Paladin2]

No, you are missing the point. Don,t give the gov,t stolen money through inflation.

[Vermont Lt]

I think the original poster is thinking gross revenues.

That is not income. We both know that.

You want a tax scheme that will encourage investment and capital investment at that.

If you are going to build roads you need big capital expenditures are the outset. You are not going to spend $10 million at Catapillar, AND pay 10% on your first dollar. It would freeze up capital spending. Factories would close (those that are left) and the whole thing falls apart.

People think that the income tax on their wages make up ALL of the tax base of the country. They are wrong.

The tax code needs to be cleaned up for the people on the ground, but the real money is made at the corporate tax level. Make it easier to bring money home from overseas and you will see boatloads of cash coming home.

I guess you could do a flat tax for the “people.” It would save some money, put the HR Blocks out of business, and the IRS could cut staff and there would be no such things as refunds.

But it would do almost NOTHING to the income of the government.