A Working Stiff's Tax Reform Proposal

by Laurie Kimberling

I would like to see three changes in the way we are taxed.

Resurrect the wealth transfer tax. Millionaires who reap great profits from our capitalistic system should pay a tax when they transfer wealth to others. Amassing great wealth depends upon the efforts of many around the world and across the ages.

Enact a national sales tax. As Boomers move from earning income to spending wealth and Social Security checks, the tax system has to move with them. Tax all goods including food, medicine, gasoline, yachts, caviar, and BMWs. no exceptions!

Integrate payroll taxes with the income tax. An integrated tax would eliminate extra taxes on labor income An integrated tax would also simplify the tax code by disentangling a huge spending apparatus that lies buried therein. Our current income tax calculation contains two parts. The first part consists of structural provisions necessary to implement the income tax on individual and corporate net income. The second part is government expenditures carried out through special tax breaks or loopholes. These tax expenditures take many forms: exclusions from income, exemptions, deductions, credits, deferral of tax liabilities, or special tax rates, and are designed to favor a particular industry, activity, or class of persons. Tax expenditures are sometimes also called preferences, stimulants, shelters, relief, incentives, etc. This spending is grafted on to the income tax proper. It has no basic relation to the income tax and is not required for its operation. While tax experts commonly cite equity and efficiency problems created by embedding spending measures in the tax code, the underlying problem is one of government transparency, for the resulting complexity provides the smoke screen which prevents citizens from seeing clearly how taxes are collected and how they are spent.

Instead of hiding government spending in the tax code, we can meet our social and economic needs openly through direct spending, i.e. grants, loans, loan guarantees, and interest subsidies. As the smoke clears, everyday citizens will enter the public sphere of political discussion and decision making. In the discourse of everyday life, we will consider how we want to live and relate to others. We will analyze the problems we face, and clarify our needs and goals. We will examine our passions and criticize deceptive language. We will consider our moral direction and steer clear of false gods. Insights will emerge from this reflective process. And then we will choose deliberately the way to spend tax money, instead of having the government do this for us.

Spending Priorities

If I could decide today where to allocate my tax money, here are three places I'd direct it.

Support for young families. We should promote family well-being and the development of autonomous citizens by providing a mother's benefit and by eliminating the marriage penalty. At age twenty-one a mother would become eligible for twenty years Supplemental Childcare Income. In addition she would receive a twenty year Social Security credit so she doesn't face poverty in old age solely because part of her lifetime work was rearing children. Mother has a job--the most important job on earth. She works twenty-four hours a day seven days a week nurturing and guiding the education of our future family members, workers, and citizens. Mothers support this nation through their contribution of children, strong families and communities, and their paid labor. We in return can support mothers with a small stipend and retirement security. From a $600 monthly stipend a mother would pay a $30 tax and save $60 for retirement. She could use the remaining $510 to care for her children or to hire a baby-sitter while she did other work. In addition to a mother's benefit we must eliminate the marriage penalty. Presently, we favor single mothers over married couples in the tax code. A husband's income, his gift to his family, can push a family beyond eligibility for benefits such as healthcare, food stamps, and housing yet not fully replace the. Like the cult leader, governments rivals husbands to provide food and shelter and calls upon wives to forsake their husbands. To eliminate the marriage penalty, first review the entire gamut of income conditions benefits. Make each benefit universal or else eliminate it. Start by making universal health care and free meals at school. Eliminate childcare subsidies rent subsidies , energy subsidies, the Earned Income Tax Credit, child credits, Temporary Aid to Needy Families, food stamps, and the accompanying bureaucracy. Second , tax individuals rather than households, from one tax rate table on net income plus direct benefits received, such as stipends and money for healthcare and education. Providing a mother's benefit and eliminating the marriage penalty, together with a sound Social Security system, yields a support structure in line with the intention of promoting family well-being and the development of autonomous citizens.

Retirement security. Require that everyone save 10% of his/her income in a low-cost, broadly diversified fund of stocks and bonds. Because home ownership is an integral part of retirement security, provide a small government grant toward the down payment on a house. Update the Social Security system.

Health and Education. Assign the federal government greater responsibility for assuring each American has access to healthcare at a reasonable price. Return the responsibility for educating children to state governments, local communities and families.