One problem with our tax system is that we touch every transaction twice. I have to touch the paperwork when I spend or earn money. At tax time, I must go through all that paperwork a second time while filling out tax forms.
The tax system creates all sorts of extra transactions. Self-employed people must pay estimated taxes each quarter. Employers burn resources paying withholding taxes each pay cycle.
I created a tax reform proposal called the Object Tax that eliminates all of this extra paperwork.
The Object Tax taxes an abstract object between income and consumption. That abstract object, of course, is your bank account.
You would have your entire paycheck (no funds withheld) deposited in a savings account. You pay a tax when you withdraw money.
Let's say your income is $1000. That full amount would go into your savings account. You pay a tax to spend money. Let's say your tax rate is 20%, when you go to withdraw the funds, you would get $800 in cash and pay a $200 tax.
The program eliminates the capital gains tax. You can sell investment A and buy investment B without having to pay a tax; However, to spend the money, you must pay a hefty tax.
The progressive rate would be based on a combination of net worth and income. Let's say I had a stock portfolio worth a million dollars. I would have to pay the top tax rate even if my reported income is a few thousand dollars.
This way the program fulfills the Buffett Rule.
Deductions are simple. Rather than declaring deductions, the Object Tax would allow certain transactions to go through without a tax. This means you make your personal tax decisions at the moment you spend the money and you never have to touch the transaction again.
The object tax is best understood as an account tax. I used the fancy name "object tax" because the basic idea can be used on any financial object. The program has a progressive tax rate based on a combination of income and networth. The program fulfills the Buffett Rule. Since the taxation happens at the bank, it is easier to implement than either an income tax or a sales tax.
Now, the trouble is getting someone to listen to the idea. If your group would like to host a presentation on this idea or the Medical Savings and Loan, please contact me.
This tax has you touching tax related decisions once and only once. You would pay your taxes when you move