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Tax fairness

In an interesting and illustrative piece in the New York Time, "Paying Far More Than 13.9%: A Taxpayer’s Lament", the writer discusses his actual tax rate, taking into account all taxes:

"I paid 24 percent of my adjusted gross income in federal taxes and 37 percent in combined federal, state and local income taxes. I paid 49 percent of my taxable income in federal income tax, and 74 percent of my taxable income in combined federal, state and local income taxes. My totals include federal payroll and self-employment taxes.

...It turns out that my individual circumstances are a near-perfect storm of punitive tax policies. Nearly all my income is earned, as opposed to capital gains, carried interest or dividend income taxed at a lower rate."

It is essential that we substantially reform our income tax system so that all income is taxed equally. Among other changes, I advocate:

  • Taxing all income from any source equally so there is no distinction between income from work, which is currently penalized, and income from investment, which is currently favored.
  • Create a lower, progressive tax rate structure.
  • Repeal the Alternative Minimum Tax.
  • Remove caps on application of the Social Security and Medicare tax.

Such changes will make the tax code more fair.