Saturday, January 1, 2011

Tax reform ideas

I’ve spent quite a bit of time bitching about taxation of late, without offering what I think would be a better alternative. Here are a few ideas I’ve been batting around for several years now. They’re not fully fleshed out and I’m looking for feedback (positive or negative) and additional ideas on the subject.

First, I think we should abolish income tax entirely. People should be rewarded for working, saving and creating new wealth, not penalized.

Instead, the government should tax money when it’s spent, exempting essentials like food and minimal subsistence amounts of energy, water and shelter requirements.

All new automobiles should be subject to high taxes with luxury taxes applied to those with poor fuel economy or those considered luxury automobiles.

Flight taxes should be levied to the point of making air travel a luxury item.

Excessive use of gasoline and diesel should be subject to taxation (on the order of a couple of dollars per gallon). Perhaps citizens could receive rebate coupons for so many gallons per month and anything purchased above that minimum amount would be subject to the full tax rate.

Coupled with a plan to provide new public transportation systems and revamping our freight rail system, we can reduce our use of fossil fuels until viable alternatives present themselves.

Land should be taxed on a multi-tiered system, with a lower tax basis for land used to grow food and/or to produce other essential items, thereby employing people, while high dollar residences, rental property and non-essential resort-like properties should be subject to higher taxation.

Equity market income should be subject to taxation at reasonable rates, and so should capital gains at the time of sale or transfer of ownership.

Inheritance taxes should also be levied, but at reasonable rates, and with exemptions for smaller estates.

I think this plan encourages reinvestment and saving and discourages growth for the sake of growth. I also think it would curtail excessive energy use and driving for the sake of driving. We have a finite supply of fossil fuels left and it’s time to acknowledge that fact.

Edward Abbey once said, perpetual growth is the ideology of the cancer cell. I think he was on to something.

What do you think?

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