MC: "It is appropriate that deductions would be allowed for expenses related to the production of income. This would include business expenses, investment expenses, and employee expenses."Hmmmm...giant loophole right here.....MC: "I would also allow a deduction for education expenses (including college expenses) related to one's career or investments. However, the cost of education courses not related to the person's career or investments (such as “general education” classes that colleges usually require) would not be deductible. Also, the deduction for career education expenses would only be allowed once the person actually began working in the profession."The bureau of determination of what is 'educational and relevant'?...Is Psychology relevant to a business major? Is basic chemistry and physics releaveant to an Electrical Engineer? What you would get would be courses like 'Pyschology for Business Majors', and "Chemisry for Engineers' (which would be the same as "Chemistry for Physics Majors" but have a different name?No way to determine that......MC: "All investment income would be taxable currently at the one low flat tax rate that applies to all other income"Projections are that rate would have to be at 20% or so...that ain't so low compared to 10 or 15%. In fact, it is double the 10% cap gains rate that lower income people pay. OK...no tax deferral.....folks not likely to save a dime toward retirement then, especially if the company matches them, and they pay income tax on the match each and every year..... well, why bother to even save it...just spend it...heck, why not have the companies not give it since you can't defer it...great for the companies..not so great for the employees.. oh, you can give everyone money later in retirement...MC:" I'm an entrepreneur, I am going to look at the potential after-tax return that I could possibly earn from starting a new business as well as the risk involved. By significantly reducing after-tax returns, high marginal tax rates significantly reduce the number of business opportunities that are pursued for any given level of risk"That's exactly why those who invest in 'risky ventures' get rewarded by LONG TERM capital gains taxed at lower rates. If they were to pay higher flat tax rates, they would be less likely to invest, and likely to pull the trigger and bail out sooner..no penalty for cashing out if things don't look so good for a while.... meanwhile, entrepreneurs down the drain. now, you were saying? I assume also that you aren't going to allow losses on income tax either for gains/losses.....heck, if you didn't make money, tough..... no deductions, remember!....Or we create yet another loophole????This is got to be some of the world's worst gobbledegook..."MC: #4 - The estate tax would be eliminated, although income tax would be due on inheritances received."SOunds good, but....MC: Under my proposal, the estate tax would be eliminated. "SOunds good so far...."Instead, inheritances and gifts would be taxable to the person who receives them at the low flat rate."OK...now to determine what that 'low flat rate is'.....MC: " If the deceased bequeathed assets with unrealized gains or losses, the gains or losses would be treated as realized on the deceased's final tax return."Huh?? You already said the receiver pays the tax.....suppose the person dying has only a house worth $600,000 ....and no cash or anything else..... it was bought for $10,000 60 years ago....There is one heir who has lived in the house with the person who died. Who pays what tax? At what rates. On what gains? And who might have all the information to determine what gain there was over 60 years???? including, but not limited to all improvements? YOu gotta be kidding. MC: " Currently, there is an annual exclusion for gift taxes of $12,000 per person. Under my system, gift givers would never pay a tax. Instead, the person who receives the gift would include it as income. However, I would allow a small amount to be excluded (not $12,000, but maybe a few thousand), because from a practical standpoint, I don't think it would be worth it track all the small gifts that are received and record them as income (and people aren't likely to report small gifts anyway)."Another loop hole....so I give someone a whole bunch of small gifts, that is OK, but one large gift isn't? And how in heck you going to track that???MC: " Under this system, income and gains couldn't be deferred (or excluded) forever, and there would be no exemption amount."Good...let's call it the lawyer protection act...I got 20 stocks that I haven't figured out the 'gains' on...splits on splits on splits on splits on spin offs....... and likely I'll die with those assets in my portfolio..... it would take 100 hours to figure it out, at least....AT 200/hr, it would cost $20,000 or more to pay a lawyer to figure out just that part of an estate.....MC: " It is very likely that this system would generate more tax revenue than the current system (which only provides about 1% of total tax revenues, despite all the spirited debates on the issue), which has a large exemption amount and a punishing tax rate (even after being decreased to 45%) that encourages people to waste a large amount of money hiring expensive estate lawyers to take advantage of a tremendous number of loopholes to avoid the tax."That is a wishful conclusion based upon what? As far as the proposals go, you need to raise at least the same revenues, and likely much more to offset many other things...... you talking about on estates?I'm sure the tax lawyers would figure ways around this, like 'family corporations' or something where you dont' pay a 20% tax on assets at death, including family farms, family businesses, no matter how big or small......or on appreciated real estate..oh, we haven't taken that into account yet have we? You already said you aren't going to penalize folks for inflation ........So now, reams and reams of data included in estates, about the 'inflation' on each and every asset, to determine 'gains' that the dying person has to pay......So this means that before you die, you go out and borrow all sorts of money, so you have negative net worth? Or you manage to transfer assets to someone, selling them the family farm for $1 before you die????? The current system is just another ill-advised system designed to punish people for committing the sin of being financially successful and having the gall to want to share some of that success with the people they care about (how evil!).MC: "Obviously, this would mean that the flat income tax rate would have to be pretty high to pay for the benefits under the current system. However, I would change the Social Security and Medicare systems so that benefits are only paid to the poor. I know it is a radical concept to pay benefits only to those who need them, but it is a crazy idea that just might work! "If no one saves for retirement, due to no deferral of taxes in 401Ks, no matching, no deferment on dividends, or on share purchases via dividends..taxable all across the board...where local tax rates have gone up to compensate for loss of tax free bond status now competing with business for loan rates..... No one will have retiremetn savings or pensions...so the gov't will have to support 'all the poor people' since no one will have savings.Duh!....This proposal shot itself in the foot so many times it is pathetic...t.
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