Home Table of Contents
the Tax Code
Our current federal tax code contains four principal areas of
complexity: 1) the sheer variety and number of taxes and fees, 2) the
differing tax schedules and scales applied to various sources and amounts of
revenue, income, gain, and windfall, 3) a complex labyrinth of deductions,
exceptions, loopholes, and write-offs designed by the wealth-serving writers of
the tax code for the purpose of evading the payment of taxes, and 4) social
engineering, a maze of corporate and personal subsides and credits designed to
support various causes or to adjust or rearrange in some way the social
To this complexity we add a Mt. Everest of complimentary
complexity in the private sector: millions of perplexed, harried taxpayers
scrambling to meet the tax deadlines, an army of tax accountants gathering
information, making calculations, and filling out a sea of paper and electronic
forms required by the taxpayer and by the taxing agency, and another army of lawyers and money manipulators
in financial institutions and in other corporations and businesses cranking out
an ever more varied and fanciful collage of financial actions, tools, and
instruments designed to dance with or do end runs around the intricacies of the
tax code for the purpose of minimizing or avoiding altogether the payment of
The main purpose of the complexity in our tax system is
obfuscation, to prevent everybody else from seeing the slight of rich hands
avoiding the payment of corporate and personal taxes while dumping the load onto
The principal proposal of this work is to create a forth
branch of government, the demos, consisting of the entire electorate directly
deliberating and voting on twelve of our most central political-economic
issues. Among other things, the power to tax would be removed from the other
branches of government and placed fully into the hands of the demos. Five of the
demos issues would deal with the amount that we choose to tax ourselves and the
distribution of that tax burden. All taxes, levies, and fees of every kind at
the federal level would be eliminated and replaced by only three simple,
sliding-scale taxes which allowed no exemptions of any kind: a tax on the annual
gross revenue of corporations and businesses, a personal income tax, and an
inheritance tax. Thus, in one clean sweep all of the complexities of the current
tax system would be tossed out.
For a given taxpayer, all corporate and business revenues from
every source or stream during a tax year would simply be totaled and taxed. So
also with all personal income and inheritances; each would be simply summed and
taxed. All sources of revenue, income, gain, and windfall of every kind would be
completely taxable. There would be no exemptions of any kind for any
corporation, business, or individual.
That sounds rather scary, doesn’t it? The wealthy would do
their best to frighten the middle class by reminding it that its loopholes would
be lost too. But one shouldn’t fall for this scare tactic. Under our current
tax system, tax loopholes for the wealthy are much better than anybody else’s. In a
simple, sliding-scale tax system without exemptions, we would pay taxes on all
of our revenue or income but at a much lower rate than we currently pay on a
portion of our revenue or income. In the end, when all the dust settled, with a
sliding-scale tax system with no exemptions, wealthy corporations and
individuals would no longer have available the hiding places and the tools they
currently use to evade the payment of taxes and to dump the burden onto others. The
middle class and the working poor would be much better off with a no-exemption,
sliding-scale tax system the tax scales of which are set by the entire
electorate in the demos than they are under the current system with scales set
on everyone by the self-serving elite.
Despite all of the good that would be achieved with the
simplification of our tax system, the question may be asked: In our making such
a radical simplification wouldn’t we be throwing the baby out with the bath?
Aren’t at least a few of the complexities in our current tax system there for
good reasons? Isn’t some complexity necessary for the purpose of achieving
fairness and equity in taxation?
Consider the following situations:
If one lived in a house for 20 years, sold it, and moved to
another location to follow a career, under our no-exemptions rule the
money received from the sale of the house would be added to the taxpayer’s
other income for the tax year sending the taxpayer’s tax rate into higher
regions and the tax bill into the stratosphere leaving significantly less money
to buy the next house. And what about all the money that the taxpayer originally
paid for the house? The taxpayer has already paid taxes on that money. Shouldn’t
it first be subtracted from the sale price of the house?
What about a business that moved to a new location or sold off
part of its assets to become more efficient or to focus on that which it does
best? What about someone who made a “killing” in the stock market, who won a
lottery or won at gambling, or who was wise or lucky enough to hold a piece of
property whose value wildly increased before being sold? The person may have been
poor for his or her whole life until the gain or winning, and now, suddenly, all
that will have changed. But at tax time the person would fork over a significant
chunk of the gain. What about someone who had just completed a long-term
contract and was paid a lump sum at the end of the work? What about somebody who
had just received a gift or an inheritance? What about anybody who had received
any significant lump sum or amount of property?
In our search for equitable simplicity shouldn’t we retain
the concept of a capital gain, the cost of something being subtracted from its
sales price and only the gain taxed? And surely we must also create a reasonable
way to tax lump sums of revenue and income? For all of its good intentions,
aren’t we forced by the need for a certain amount of complexity to back away
from a no-exemptions tax system located entirely within the demos? For, if
any complexity at all is introduced into the system, that complexity could not
be handled by the demos and would have to be defined and handled by the
plutocratic, err… ‘representative’, branches of government, wouldn’t it? Wouldn’t that undermine the
power of the demos, and nullify the result of this whole enterprise?
Recall our analysis of our human condition and of our
political-economic situation. We are organized into dominance hierarchies. The
cultural expressions of our biological dominance are authoritarianism and
plutocracy, governance by the wealthy. In our American expression of dominance,
the wealthy, aristocratic founders created a constitution and a government that
the wealthy use to serve themselves first and best. They created a government of
divided powers but— due, among other things, to a deeply flawed electoral
system that overwhelmingly favors the wealthy—divided only among the wealthy
excluding all others and excluding democracy to the best of their ability. Their
“republican” form of government, our supposedly “representative”
democracy, is and always must be deeply flawed.
But, as the phrase the tyranny of democracy
indicates, pure, unopposed democracy is also deeply flawed in that the simple
majority can create oppression of another sort.
We found our solution to
authoritarianism and plutocracy to lie in a redistribution of the powers of our
current republican form of government. We created a hybrid consensus
government consisting of a new, truly democratic branch, the demos, the
powers of which were set in balance with the existing plutocratic branches,
redeeming them by rendering them truly democratic and representative.
Along with other powers, the demos was given the sole power to tax.
Now, the political-economic power held by America’s elite is
huge. It holds all the aces. The demos would have to
have sufficient power to adequately counterbalance the power of the plutocratic
branches. Possessing the sole power to tax was to be a
cornerstone of that power. To the extent the power to tax was diluted by being
shared with the plutocratic branches, the power of the demos itself would become
Historically, every advantage has remained in the hands of the
wealthy few. It is the exception that the many has had the upper hand or even a
sufficient measure of power. It is extremely difficult to gather sufficient
power into the hands of the many to effectively counteract and counterbalance
the power of the few. Therefore, it is anathema to dilute the demos’ sole
power of taxation.
But even if this were done by giving the plutocratic branches
the power to introduce some complexities into taxation, wouldn’t the demos
still possess significant power? The demos would bring the entire electorate
into one political body and give that body the power to determine how much we
are taxed and the distribution of that tax burden. The demos would have the
power to set the length of the Standard Workweek, the size of the minimum wage,
and the amount of the national debt. And the demos would provide the means for
electing the president, senators, and representatives in a powerful, new way.
This new way of electing these officeholders would give the
electorate the ability to place into office people who truly represented it.
These representatives would add only that complexity into the tax code which
served all of us well and none to serve only the wealthy. That’s the way it
would work, wouldn’t it? And, overall, the demos would retain sufficient power
to balance the plutocratic branches, wouldn’t it?
Well, that’s the big question, isn’t it! The big worry
would be, of course, that while writing a new, improved tax code our new,
improved representatives slipped into that code enough wealth-favoring loopholes
and evasions to undermine the consensus of the demos on taxation, the size and
distribution of the tax burden that it sets.
Even with our new way of electing its members, depending on
those within the plutocratic branches to write honest tax code would place us
dangerously close to our present situation and throw the results of our whole
power redistribution enterprise into question. There would be no point in
creating a demos that possessed powers insufficient to its task. So, again, once the power to tax
had been removed from the plutocratic branches of government and placed into the
demos, it would be anathema to place even the smallest portion of that power back into
the their hands.
Here are four possible solutions to the dilemma that would
keep the power to tax solely within the demos: 1) Embrace the no-exemptions rule as the lesser of evils. 2) Create a dozen or so most
essential tax rules at the time that the demos is created (following the
guidelines discussed later in this appendix), and then create no new ones.
3) Give the demos the power to create and maintain a simple tax code.
4) Combine both 2 and 3; create an initial simple tax code at the time the
demos is created, and then give the demos the power to alter and add to that
Let us examine the strengths and weaknesses of each of these
Embracing the no-exemptions rule as the lesser of evils
would keep the sole power of taxation entirely within the demos and
undiminished. But we would forego the concept of capital gains, and we would
have no mechanism to handle lump sums of revenue or income. Lump sums would
simply be added to all other revenue or income received during the tax year
driving the taxpayer’s tax rate to higher levels.
There are, however, some mitigating circumstances. First, this
method possesses a rudimentary fairness in that we would all be in the same
boat. For example, any person selling a house would have to have the
whole selling price of the house added to his or her current tax year’s income
Second, by our demos consensus we would be setting the
aggregate amount of our tax burden and the distribution of that burden. Thus, we
would likely have a smaller, more efficient government and lower tax rates that were easily borne
even during a year that contained an unusual lump sum of revenue or income. A
taxpayer’s average tax burden over the years would be significantly less than
it is under our current tax system.
Third, the notion of double taxation causes many to grind
their teeth. If one buys a home with funds which have already been taxed and
later sells it for a larger sum, then it seems almost instinctually fair that
one should only be taxed on the gain above the original purchase price. Our
current tax code offers consideration for this and selected other particular
situations. But double, triple, quadruple, etc. taxation is laced throughout the
entire system. By the time that an end consumer receives a product or service,
it has been taxed in many ways. All of these “invisible” taxes are, of
course, added into the price of the product or service. The consumer ends up
paying all of these taxes with money on which he or she has already paid taxes.
A tax system with no exemptions and double taxation is not wonderful. But it would also not be something new. Even with its
flaw of double taxation, a demos tax system with no exemptions would result in a
significantly lower overall tax burden for taxpayers than what we bear under the
multiple taxation of our current system.
A few people who are able to see deeply into the matter would
understand that it is best to accept this first no-exemptions method. Its
virtues outweigh its flaws. But many would be skeptical and want to examine
Moving on to our second method of keeping the power to tax
solely within the demos, we could create a dozen or so most essential tax rules
at the time that the demos is created (again, following the guidelines discussed
later in this appendix) and create no new ones. We can readily see that in
creating no new rules once the demos is set in motion, we would have a rigid
situation that did not allow further amendment as time and wisdom might demand.
However, this second method would get us beyond the even more severe limits
placed upon us by the no-exemptions rule of the first method. Even just a
few judiciously devised rules could take us a long way toward what many would
feel to be a more equitable and comfortable tax system … if the rules really
were equitable and the elite did not manage to slip any self-serving rules among
Consider this proposal for the more equitable taxation of lump
sums than merely adding them to one’s revenue or income for the year:
The basic idea is to level lump sums over a period of years so
that they may be taxed more lightly in smaller chunks. The scheme could be
created both as simple tax code written at the time of the creation of the demos
or as code written later by the demos.
Notice especially the nearly universal applicability by
taxpayers of the proposal. Every corporate, business, and
individual taxpayer in America could use this proposal to advantage. The few
other rules included in a brief, simple tax code should also be universally
applicable. No rules should be included that by their nature effectively apply
only to a wealthy or some other select few.
Every corporate or business taxpayer in the nation that wanted
one could own one and only one special deferred revenue account which
could be offered by banks and other financial institutions that met
qualifications for financial soundness. Every individual taxpayer who wanted one
could own one deferred personal income account. And, as needed, each
individual could also own one deferred inheritance account. A general
name for all three types of deferred accounts might be deferred earnings
accounts. All other means and financial instruments that involve the delay,
reduction, or elimination of the taxation of revenue, income, or gain should be
eliminated. The funds that a taxpayer added to a deferred earnings account could
be invested to earn interest but only into instruments in which the principal
was protected and FDIC insured.
Rather than our defining exactly what a lump sum is or
what specific sources qualify, a
taxpayer could deposit any desired amounts of revenue, income, or inheritance
into the appropriate deferred earnings account. A taxpayer could run virtually
all revenue, income, and inheritances through these accounts, year in and year
Each deposit into the deferred
earnings account would be divided into ten portions and would follow its own
ten-year schedule of maturation. Most people’s accounts would likely be quite
simple, not containing many deposits. But a given account may contain hundreds
or even thousands of deposits, each following its own ten-year schedule of
The holder of an account could make deposits into and withdrawals
from the account at any time. When a deposit of any amount was made it would be
automatically divided into ten equal portions. Beginning with the day of the
deposit, the first portion would mature in exactly one year, the second portion in
two years, etc.
When a portion of the deposit matured, it would be
automatically transferred out of the account to some other account of the
account holder’s choice. On the day of the transfer, the transferred portion
would become taxable and would have to be added to the taxpayer’s revenue or
income for that tax year. The second portion of the deposit would
be automatically transferred and become taxable one year later. The third portion would be
transferred and become taxable the third year, etc. A financial institution
providing deferred earnings accounts would have to report all such transfers of
funds to the tax agency, i.e., to the IRS, as taxable income. Such
funds would no longer be taxable and could not be re-deposited into one’s
deferred earnings account; there would be no reason to; there’s no taxation to
Interest earned by funds in one’s deferred earnings account would be periodically
transferred to some other account of the account holder’s choice and become
taxable income on the day of the transfer. Or it could be periodically credited
to the deferred earnings account itself, each credited amount having its own
ten-year schedule of maturation from the date of the credit.
An account holder could withdraw funds from the deferred
earnings account at any time following these rules: The particular original
deposit from which the money was being withdrawn must be specified. The money
could only be withdrawn in the amounts of the original ten portions of the
deposit beginning with the tenth portion and working backward toward earlier
portions. The withdrawal would become taxable revenue, income, or inheritance during the tax year of the
withdrawal. The institution providing the account must report the withdrawal
to the tax agency.
Corporate, business, and individual taxpayers would be able to run any
and all desired revenue, income, and inheritances (lump sums or otherwise) through such accounts to level out the sums for the purpose of
taxation. Ultimately, all revenue and income would be taxed but at more
reasonable rates than if lump sums were taxed in a single tax year. This
proposal would place the taxation of lump sums or irregularly received sums on a more even keel with, say,
the taxation of revenue and income that comes in more or less similar amounts
daily, weekly, monthly, quarterly, or annually.
Upon the death of the account holder, the portions of the
deceased’s estate inherited by others could, if desired, be taxed entirely
during the current tax year, which, given low to modest tax rates, would likely
be the option taken by most people receiving smaller inheritances. Or an inheritance could be
liquidated, if necessary, and the funds deposited into the inheritor’s
deferred earnings account. However, any portion of the inheritance which was
already in a deferred earnings account of the deceased’s would be deposited
into the deferred earnings account of the inheritor to continue its schedule of
maturation already in progress.
Thus would be solved the problem of taxing lump sums. In
addition to taxing lump sums more equitably, this proposal would also provide some
other benefits. All corporations, businesses, and individuals would enjoy the
same measure of tax deferment of from one to ten years on the various portions
of deposited funds. With depositors motivated by the combination of lower taxes
on revenue and income, deferred taxes, and the interest earned on such accounts,
the rate of savings in America would rise
After the initial ten-year period, this deferred earnings
proposal would not significantly affect the amount of tax revenue that the government
collects. Any deposits entering the deferral pipeline would be offset by other
maturing portions of deposits ripe for taxation. The tax revenues lost due to
lower tax rates on lump sums would be offset by the taxation of the interest
accrued on the deferred earnings accounts. And millions of people possessing
comfortable amounts of savings would need less government assistance during hard
This deferred earnings proposal serves as an example of a way
to create simple, universally-applicable tax rules. The tax code need contain
precious few of such rules to be made equitable and just.
The biggest drawback to the scheme described here is that one may want
to use a lump sum now rather than have it enter one’s revenue or income stream
in ten chunks over a period of ten years. A modified proposal could deal with
Rather than depositing lump sums and other revenue or income into
deferred earnings accounts, they could be immediately utilized while their tax
liabilities are entered into deferred tax accounts which would not
contain funds but only tax liability records. It would be the tax liabilities
which are divided into ten equal portions following a ten-year schedule of
maturation in a manner similar to that described for deferred earnings
accounts. Whether deferred tax accounts were maintained by taxpayers, third
parties, or the tax agency, maintaining the accounts on the Internet would
provide convenient access for the relevant parties.
The principal difficulty with this deferred tax scheme, and it’s
a big one, is in the collection of the taxes due. As the taxes on a lump sum
became due over the ten-year maturation period of the tax liability, the lump
sum itself may be long gone: spent, squandered, invested and lost, etc. The
taxes would have to be paid from new funds, funds the taxpayer may not have. The
taxpayer’s finances may have gone belly up. The corporate, business, or
individual taxpayer may no longer even exist. Perhaps for a fee third parties
could bond or somehow guarantee payment of the taxes or the taxpayer could,
without disturbing certain FDIC insured invested funds, use them as temporarily
“locked” collateral for payment of the taxes. Given such complexities, it is
probably most wise to simply let taxpayers decide how much, if any, of their
earnings to run through their deferred
earnings accounts and let it go at that.
A simple tax code could easily contain a few rules that define
certain situations basic to all of us, e.g., the income from the sale of one’s
primary residence would not be taxed if the funds were used to purchase another
primary residence within a specified duration of time.
We now turn to our third possible way to keep the power to tax
solely within the demos: Give the demos the power to create and maintain a
simple tax code. Such a code could include tax rules such as the deferred
earnings or deferred tax proposals discussed in this chapter and simple rules such as that
covering the sale of one’s primary residence.
Unlike a rigid tax code written at the time that the demos is
created and set in motion, code written by the demos could be amended and expanded. Perhaps
as or even more important, none of our nation’s tax code would be written by
wealth-serving, self-serving elites behind closed doors but by all of us, the
entire electorate within the demos.
At first glance, this seems impossible. How could a body consisting of the entire electorate write something
as long, complex, and esoteric as tax code?
Before moving on to an explanation as to how it could be done,
let’s reflect a bit on the previous sentence. Tax code need not and should
not be long, complex, and esoteric. It never should have been so, even in
our current tax code. In fact, if we had representatives who were honest brokers
that fairly represented all of the people including when writing tax
code, then we would have no need in the first place to create a demos,
reorganize the powers of our government, and remove the power to tax from the
plutocratic branches. A prime virtue of the demos’ writing of our tax code
would be that the code would, of necessity, always remain simple, concise, and
That the demos may write tax code, a mechanism would have to
be created to facilitate the process. The first element of that mechanism would
be the addition to the twelve demos issues of a thirteenth “tax rules”
issue. This issue would provide the means to propose, deliberate, and vote on
rules of taxation and nothing else.
Recall that beneath each demos issue’s initial page a formal
hierarchy of pages exists which serves to facilitate the process of pro and con
discussion of the issue. The structure, function, and process of these pages and
their discussion was described in various chapters, particularly in the chapters
entitled Consensus Democracy and The Demos Electoral System—An Honest Way to Elect the President,
Senators, and Representatives.
Recall that the deliberation of issues involved
pro-and-con discussion and that any demos member could introduce,
argue, and counter-argue proposals. Further, a combined method of voting and a
“round robin” mechanism was discussed that fairly presented the various
opinions to the demos electorate. The only thing to be added here is that for
the tax rules issue the deliberations would center on proposed tax rules and
Not being numeric in nature and not lending itself to
mathematical calculations, the tax rules issue could not be a consensus-style
issue as would be the nine economic demos issues but would have to be handled in
a majority-rule style. Just as the
founders required at least a half-dozen times in the Constitution, not a simple
majority vote but a super-majority of two-thirds of the demos members would be
required to pass a tax rule (or tax law, if that is the better term).
This super-majority requirement would significantly increase
the probability that any tax rule approved by the demos would serve the majority
of taxpayers rather than some privileged few. The demos members should be ever
on guard against and reject tax rules which are written in such a way as to
appear to be usable by most taxpayers but which in actual practice, when meeting
the qualifying criteria, serve only the few. This would be very dangerous turf,
a potential back door for the insinuation of plutocracy into the demos. The
non-wealthy members of the electorate would have to be ever vigilant about and
really understand the full repercussions of any tax laws proposed within and
approved by the demos.
demos membership would be constituted of all able, of-age citizens, the
tax rules that it created would not require further approval by the executive or
legislative branches. Its rules, however, would have to pass constitutional muster should
relevant cases involving the rules come before the Supreme Court.
Any number of tax rule proposals could be simultaneously
debated under the tax rule issue. Only one proposed tax rule at a time could
exist on the issue’s initial or primary page for formal required voting by the
entire demos electorate. A tax
rule may only appear on the initial page in its unabridged form. No title or
brief description may be used. The rule should be assigned a number for easy
reference. Of course, brief pro and con arguments would also appear on the page
as described elsewhere in this work.
The proposed tax rule that made it to the tax rules issue’s
initial page for formal demos voting would be the one that currently held the
most votes among those demos members deliberating and voting on proposed tax
rules beneath the initial page, the votes that increase an argument’s
visibility as discussed in the chapter entitled Consensus
One procedural rule would always exist in the top position of
a list of the proposed tax rules under discussion. The procedural rule would be
that no current rules may be amended and no new rules may be added to the tax
code at this time. So long as this procedural rule enjoyed more votes than any
of the tax rules under deliberation for amendment or addition to the code, then
it would be displayed on the tax rules initial page. Thus the tax code could be
prevented from growing in length and complexity as the demos saw fit.
A proposed tax rule that made it to the tax rules issue’s
initial page would remain there for a year. Recall that every member would have
the civic duty to refresh his or her demos votes, affirming each vote as is or altering
it, at least once a year. Requiring that a tax rule that has made it to the
issue’s initial page to remain there for a year insures that every demos
member will have cast a vote on it.
Meanwhile, beneath the tax rules issue’s initial page, the
demos members would have a long time to deliberate other proposed rules and to
bring in line, by their voting, the next rule or amendment of greatest interest.
One proposed tax rule or amendment per year, (and even it may
be voted down)? What a long, slow process! It would take fifty years to create a
tax code of even modest length! Yes, it would be a good system, wouldn’t it?
Nothing would find its way into the new, simple tax code which was not subjected
to extensive, highly-visible deliberation and which could not earn two-thirds of
the demos vote. It is highly likely that only rules could pass muster which were
written in clear, concise language and which could be reasonably utilized by the
vast majority of taxpayers rather than by only a privileged few.
Oh, but all of the members of congress, all of the nation’s
lawyers, and all of the writers of advertising, product disclaimers, and
corporate and consumer contracts would be participating in the creation and
deliberation of tax rule proposals and amendments. Wouldn’t they be able to
muck up the works with their legalese, double-speak, and word juggling? And just
how long might “a tax rule” be?
Well, not every congressperson, lawyer, and ad,
disclaimer, and contract writer is a bad person. Some wordsmiths would be on the
side of “the people” and for the good of the nation. As fuzzy-headed as many
of us admittedly are, there would be no shortage of people both within the demos
and about us in our daily lives to raise the alarm about this or that sour tax
rule proposal. The long process of haggling over a proposed tax rule would go a
long way toward rendering it clear, concise, and honest. Further, any tax rule
that appeared shiny during approved but in actual practice lost its luster could
always be brought back onto the table for amendment or deletion.
We now turn to our fourth method for keeping the power to tax
solely within the demos: Combine methods 2 and 3. Create an initial simple tax
code at the time the demos is created and then give the demos the power to amend
and add to that initial code. There is something muddy or impure about this
method. If it could be said that the demos would produce clear, honest tax code
which represented the true will of the people, would this proposal not start
them out on the wrong foot? For who would write the initial body of tax code
before the demos became functional and able to create its own tax code? The
creators of the demos, likely a people-minded lot, could create it. But would
code of their design reflect the true will of the electorate? Our current ‘representatives’
in congress could write it, but they’ve already shown us their true colors.
That is why we want to remove the power to tax from their wealth-serving,
self-serving clutches in the first place.
If there is to be a tax code more complex than simply “no
exemptions,” of the four methods presented here for our keeping the power
to tax solely within the demos, the third way—the demos should write it—seems
the surer way to achieve a simple, clear, honest code that represents the will
of all of us. The slow, thoughtful development and evolution over the years of a
small body of tax rules would be our surest road to wisdom.
Here are some principles that the demos should follow when
writing tax rules:
- Although written in terms that seem to apply to all
corporations or individuals, our current tax code contains rules that, when all
of the criteria are met, really only apply to a specific corporation, group, or
person. None of our new, simplified tax code should be defined to be applicable
only to the wealthy or to a particular class of people or type of businesses,
corporations, or organizations. There should be no rules in the tax code which
by the nature of the criteria that are applied or by the level of revenue or
income to which the rules could be realistically applied cause those rules to be
applicable to a minority of taxpayers. Every rule in the tax code should be
directly applicable by the vast majority of corporations, businesses, or
- A particular tax rule should not result in disproportionate
advantage to the wealthy taxpayer. If a rule benefits by, say, 10% a taxpayer
with a given level of annual revenue or income, then the rule must benefit by
10% or more all taxpayers with lesser revenue or income. To put it another way,
a tax rule may have a neutral or progressive effect on the overall tax rate but
not a regressive effect.
- None of the simplified tax code should exclude from taxation
the interest or
on any kind of consumer or home loans, on capital or other investment of any
kind, or on the purchase of anything whatever by a corporation, business, or
person. The deduction of interest is just a form of a subsidy, some taxpayers
being forced to pay other taxpayers’ bills. Investments and the borrowing of
money in one’s personal or business life should be entirely a private affair
having nothing to do with the tax code. To the extent that government is engaged
in providing entitlements, handouts, and social engineering, it should be done
in other areas of government.
- There should be no such thing as depletion allowances,
depreciation allowances, or any of the other hundreds or thousands of esoteric
or exotic write-offs, exemptions, or evasions that now exist in the tax code.
- There should be no rules or exceptions favoring or disfavoring
various groups or lifestyles, e.g., married vs. single, children vs. no
children, providing care for others vs. none, suffering various kinds of
misfortune or losses vs. not, heterosexuality vs. homosexuality, etc. Anyone
seeking assistance of any kind from the federal government should go to what I
earlier called The Glass House, that
part of government that transparently handles all entitlements. The tax system
is not the place to handle lump-sum or any other kind of grants.
- Beware of those bearing gilded gifts. Sly and crafty tax code
often gives an ounce to the average taxpayer while handing a pound or a ton to
the wealthy or privileged. Do not approve a tax rule that helps you only a
little while it helps others a lot. If you can’t make use of a proposed tax
rule in your own life, then don’t vote for it. If you can’t read and
understand a proposed tax rule or understand it when it is explained by someone
you personally know and trust, then don’t vote for it.
Now, of these various ways to handle the simplification of the
tax code while keeping the power to tax at the federal level entirely in the
hands of the electorate within the demos, I most favor and strongly recommend: 1) the
handling of lump sum and other earnings using the universally available (but
always optional) deferred earnings
accounts described earlier; 2) beyond
that, no exemptions of any kind for anyone at any time; and 3) handling all
entitlements using The Glass House,
not the tax system.
Thank you for reading Beyond
Plutocracy. Please share its web site address with others. Email
feedback and discussion are welcome.
Table of Contents Previous Appendix
Top of Page
Beyond Plutocracy - Direct Democracy for America
© Copyright 2001-2017 Roger D Rothenberger