Critics of the flat tax charge that eliminating the home mortgage interest deduction in exchange for a low flat rate tax would reduce the value of owner-occupied housing, the single largest asset of most American households. Critics further contend that the loss of this tax benefit will also reduce the incentive to buy a home, a cornerstone of the American dream.
The critics are wrong. Home ownership in the United states stands at about 67 percent of the population. In comparison, the rate of ownership in the United Kingdom and Australia is about 69 percent and 67 percent in Canada. Yet, mortgage interest is not deductible in any of these three countries.
1 comment:
A PLAN FOR EQUITABLE TAXES
1. All persons residing in the U.S. shall come together in units known as "households" for the purpose of reporting all income from any source, each item to be identified by payer's and payee's tax number. Members of a "household" need not be related, need not reside together, and a household may consist of as few as one person.
2. Each year congress shall set by legislation a "minimum wage" and a "tax rate".
3. The following income shall not be subject to taxation:
• An amount equal to a year's earnings (arbitrarily set at 2000 hours) at the minimum wage rate, for each adult (age 20-60) member of the household, decreasing 10% per year to 50% at age 15 and increasing 10% per year to 150% at age 70.
• All payments for what is classified as necessary health care for all members of the household including medical care, pharmaceuticals prescribed by a recognized health care professional, vision and hearing aids, and membership fees for health-enhancing entities such as gyms or other exercise facilities. Health care insurance premiums may be deducted but not health care expense paid for by such insurance.
• All educational expenses including day care for young children or legally incompetent persons, that portion of state and local taxes identified as spent on education, that portion of parochial school tuition, fees and other expenses identified as going for non-sectarian education, tuition, fees and educational materials for private school education at any level, and a per-diem allowance for students traveling more than 50 miles from primary residence for education.
• All income saved into an identified account from which investments may be made.
4. The "tax rate" shall be applied to any income over and above the deductions listed above, regardless of amount.
5. There shall be no federal tax on corporations or other business entities.
6. The Office of Management and Budget shall compute revenues to be expected using the newly set tax rate and minimum wage, applied to the previous year's reported incomes. No expenses in excess of that amount may be authorized or made by the federal government without approval by 75% of each house of Congress.
7. At the request, by legislation duly enacted by a municipality having greater than 100,000 inhabitants or a state, a surtax may be imposed on citizens of that municipality or state which shall be applied in a manner exactly as applied for the Federal tax.
8. For households whose deductions exceed total income, the Federal Government shall make payment equal to the tax rate multiplied by the shortfall in income, as shall municipalities and states.
With equality as the primary goal, this act established "households" as the taxed unit, so that all persons, whether related or not, are taxed equally. It seeks the elusive concept of fairness by taxing at the same rate all "disposable" income. It sets the Federal budget to produce a surplus in times of economic expansion and a deficit in times of contraction to promote economic stability. It encourages growth of the tax base, thus growth of the government's ability to pay for its responsibilities, by fostering health care, education and investment, all of which contribute to growth of income. It encourages savings to aid the elderly. It recognizes disparity in cost of living among various locations. It facilitates sufficient sources of revenue for states and municipalities. The extent of the tax burden on each household is clearly visible.
Post a Comment