Jlknapp505's Blog

Written in answer to a friend; political, but not party-political. Instead, it’s economic theory applied to tax structures.
Ruth, I’m not advocating a flat-tax, although that would be much more fair than the system we’ve now got. Cain wasn’t wrong in his overall idea.
But we’ve ended up with a progressive, then regressive, tax system.
I believe that the best system is a corporate tax system that’s lower than what corporations now pay, but based on gross receipts. And I believe that any company doing business in the US should be susceptible to that tax on a proportional basis. If they sell a million dollars worth of goods in the US market, then they should pay the same taxes to the US government that a company doing business in New Mexico pays. I would have one deduction from those gross receipts; money paid directly or indirectly to employees. Any money remaining that goes to building the corporation or increasing its wealth or assets would be taxed as gross receipts. No more jets for executives or 3-martini lunches as ‘deductions’ and ‘business expenses’. Corporations could still DO those things, but not deduct them. These are all ways that corporations/companies reduce competitiveness.
As for what gets paid to individuals: salaries, retirement benefits, health care, perks, all are income. And all income of any kind forms the tax base. Speaking of health care and retirement accounts, they would be paid into a federally-supervised fund. No more of this situation where a corporate raider can come in and take funds that were intended to pay for employee healthcare or retirement because the investor acquired 51% of the company; that’s one of the things that Bain and Romney did. A better approach would be to increase Social Security and Medicare and make them available to all, despite the howls of the wealthy who would have to help pay for it.
Lots of benefits here; no longer would American companies have to support salaries, health care costs, and retirement costs, and then pass all that on to the consumer. Instead, it would be paid into funds that would be protected possibly by Constitutional amendments.
Individuals would be taxed on a progressive basis just as has been the case since our tax system was adopted. Probably at slightly lesser rates for some, more for the wealthiest. They have more to lose, after all, and American society protects their wealth. So it’s appropriate that they pay into society on a commensurate basis. And income is income; no difference from an hourly wage or a dividend from investment. And no more hiding income by calling it ‘health care’ or ‘retirement accounts’.
So how could one accrue wealth in such a system?
No so easily, for sure. But it would be possible. The guaranteed way would be to invest in growing companies. Currently it’s possible for a wealthy person to buy into GE, say, and wind up paying only 10% of dividends. GE has paid NO taxes for several years, despite profits of billions. Apple too hides much of it’s income from taxation by shuffling it around from corporate entity to corporate entity. Bain Capital did that, too, and Romney directed the operation.
But if you invest in a growing company, then the company will pay out taxes on a gross-receipts basis, but the investor won’t pay any taxes at all on this. So that maximum gross receipts tax, say 15 or 20% as a beginning point, is all that would be paid.
One additional point: the neo aristocracy. We’re going to have to tax estates just as Britain found it necessary to do. Otherwise, the Waltons or their equivalent can sequester giant amounts of money and wealth from the system. That money must be returned to circulation if society is to prosper.
Ideas; what do you think of them? You can post replies to jlknapp505@msn.com or find Jack Knapp on Facebook. I welcome dialogue and constructive criticism.

This entry was posted on November 8, 2012 at 3:38 pm and is filed under Economics, Government, Politics, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.