Although no one seems to be talking about tax reform during this political season there is a serious need for reforming our existing system. Our current federal tax code is 74,000 pages long. It is so complex that Americans spend $300 billion and waste 4 billion hours complying with income tax laws each year. There is also another $300 billion in revenue lost because of cheating. Tax law should be simple, fair, progressive, and should encourage good behavior and discourage behavior that harms society. It should also provide sufficient revenue to run the country and pay off the National Debt.Generally Republicans will say that taxes need to be simplified and cut. https://fairtax.org/articles/gop-taxonomy-the-flat-taxers-and-the-fair-taxers
A Flat tax would simply replace our progressive Income tax system and Estate Taxes and Corporate and Capital Gains taxes with a single rate for everyone. This would allow the very rich to pay dramatically less and the very poor to pay much more. They will make claims that sound logical but rarely do the numbers add up. Rand Paul wants to set that rate at 14.5% but to produce the same revenue tax experts say the rate would have to be around 28%. Rand Paul’s Flat tax: https://randpaul.com/news/rand-pauls-fair-and-flat-tax
The Fair tax is a bit more fair because it helps the poor. It is still a flat tax that would eliminate all other taxes, but it would provide a prebate. https://www.youtube.com/watch?v=sUxBJ7n0T8U&list=PL6BB749E90D85820B
So what is a prebate? A prebate would send everyone a check each month of $209. https://www.youtube.com/watch?v=upeCzEQSXtU
The fair tax prebate is similar to a very small guaranteed minimum income. If people had a minimal monthly payment so they could eat and also a voucher that would pay something for housing, the government could eliminate many social programs like welfare. https://en.wikipedia.org/wiki/Guaranteed_minimum_income
Democrats will say that taxes need to address the huge income inequality in the country so taxes should be more progressive and should be raised on the rich. https://www.youtube.com/watch?v=4-gDFjzbR80
The most popular taxes are “Sin Taxes” on those things like alcohol and tobacco that causes great harm. These taxes do double duty. By raising the price of the product they discourage use, and by raising revenue they provide funding for programs that treat alcohol addiction and discourage smoking. This concept could also be applied to other things that harm the nation.
Most people think that we also need to address Climate Change and the best way to do that is with a carbon tax.
Bernie Sanders Proposal: “The carbon fee would apply to only 2,869 of the largest fossil fuel polluters, covering about 85 percent of U.S. greenhouse gas emissions. The Congressional Budget Office estimated that the approach used in our bill will reduce greenhouse gas emissions levels by about 20 percent from 2005 levels by 2025 and will generate $1.2 trillion in revenue over 10 years. Our bill returns 60 percent of that revenue directly to American taxpayers to offset any efforts by the fossil fuel corporations to jack up their prices. The rest of the revenue would support large investments in renewable energy, weatherize a million homes a year (which itself would create hundreds of thousands of jobs and save each household hundreds of dollars a year on their energy bills), fund $1 billion a year in worker training, and put hundreds of billions of dollars into reducing the national debt.” http://www.sanders.senate.gov/newsroom/must-read/why-we-need-a-carbon-tax
Another tax that is popular is the financial speculation or “Robin Hood” tax. “The powerful new coalition of domestic and overseas charities, unions and church groups argue that a Robin Hood tax could generate $700bn (£450bn) worldwide. The tax would see 0.05% levied on each bank trade ranging from shares to foreign exchange and derivatives, creating a cash pile to be spent on measures to combat domestic and international poverty as well as fight climate change.” https://www.youtube.com/user/robinhoodtaxUSA
Senator Tom Harkin and Peter Defazio has proposed a tiny 0.03% financial speculation tax that would generate $35 billion a year while exempting pensions. Bernie Sanders has also proposed a carbon tax. http://dealbook.nytimes.com/2013/02/06/time-to-revive-the-financial-transaction-tax/
Republicans want to abolish the IRS and a very simple automated tax would do that. The simplest tax system would simply charge a very small fee anytime money is moved from one place to another. An Automated Payment Transaction Tax (APT tax) of just 0.6% could replace ALL other taxes. One big advantage is that corporations couldn’t move overseas to avoid taxes. Any company that did anything in the US would pay a very small tax anytime it involved money changing hands. http://econwpa.repec.org/eps/pe/papers/0106/0106002.pdf
The secret is that by taxing the high speed trading and financial transactions that go on without our really knowing you can generate 100 times as much revenue as just taxing wages and production, and it wouldn’t harm the economy. https://www.youtube.com/watch?v=BVQ3jpreeGg