At this stage, I do not have the kind of tools the congressional budget office or well-educated economists would afford me. Therefore, the specifics herein are designed to give an idea of the magnitude of consumption (Fair, modified Fair HR-25, (Fair Tax HR 25), income, and estate tax changes I propose. My views on taxes and the proposed system will be refined as I am able to afford experts to assist me in ensuring it will work properly in our financially complex nation.
My Political Views on Taxes and Proposed Taxation Actions
Please be careful about listening to those who say our economy will collapse if we move to a consumption-based tax system. We will be cautious. The economy may collapse anyway, the way things are going. We are behind in the world partly because we consume far too much and do not save enough for our collective futures. Because of this, my political views on taxes and proposed taxation plans are as follows to transition to an income and investment-based economy.
The income tax system should be abolished in the near term, say four years or so. It does not work because Congress has been unwilling/unable to keep the system fair and has provided excessive tax breaks for their supporters and favorite causes. It also does little to discourage consumption as most consumers are not even taxed on their income (the lower than 55% of income earners). These folks effectively have representation without taxation.
After four years or so, we would have federal taxes only based (in likely order of significance) on the following:
- Consumption (after spending cuts, estimated at 11-15%)
- Use fees (interstates, parks, postal service, fuel, other services)
- Estates (modest, except at the very high wealth brackets, and maybe not at all). It is simply unwise to allow excessive wealth in the hands of individuals who might not favor the American people in their spending.
To return our nation to fiscal soundness, I propose temporarily and significantly increasing the income and wealth taxes at the highest tax brackets. This would look something like a 50% marginal tax rate on all incomes over $1,000,000 (while cutting many tax breaks) and a 90% zero-exemption estate tax on all estates over $5-$10,000,000, with a vehicle to protect illiquid estates such as farms, ranches, equipment, factories, etc. (I do not want to force the liquidation of productive assets by raising the estate tax.)
Estates of this magnitude have simply been allowed to draw too much wealth to the top wealth brackets, and this money must be used to pay down our debts and invest in our future. Yes, the millionaires and billionaires will be asked to pay, but so will the 55% of Americans that currently pay no income tax.
I expect to slash federal spending in year one and beyond significantly. See the policy paper on that, please. With time, the IRS would be eliminated with compassion. I have met many federal employees who have privately told me the federal government is bloated and the incentives in budgeting encourage even more spending.
I would immediately institute a Fair Tax type system requiring a 5% tax at the checkout counter/page for all transactions. I would temporarily reduce income taxes on the middle class to offset this new and additional consumption tax. The income tax would only remain for the well-off after year one. This consumption tax would be raised, over time, to adjust for lost income tax revenue and as the economy adjusts.
Fair tax exemption cards would temporarily be available to exempt healthy foods, addiction programs, modest shelter, preventative medical care, and fitness programs for the very poor to avoid poverty as we transition away from being a consumption-based economy to an income and investment-based economy. We would transition these exemptions away as the numbers in poverty decrease.
We would temporarily raise taxes on the wealthy and high-income earners as we transition from a consumption-based economy to an income and investment-based economy while drastically cutting spending, paying down debt, and, soon after, eliminating the income and most estate taxes for good.