The Continuum Income Taxation Model: A Simple Change for the 99%

The Challenge: Create a 3 Page Income Tax Plan that is Equitable and Fair

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At some point of every civilization the government becomes bloated and disconnected from the people. Often it is unintended. As the disconnect widens and the bloating becomes gluttony, a revolution occurs. Sometimes it is fierce and lead with burning fire. Sometimes it fierce and lead with an enlightening flame. Change or willingness to change becomes the actual barrier to restoring order, law and most importantly a sense of fairness. No taxation document should be volumes. What is hidden in all those pages? The answer is inequity. My challenge was to create an income tax plan that was less than 3 pages long.

The Continuum Income Taxation Model:

A Simple Change for the 99%

 
An Income Tax Plan that is ‘Mostly’ Fair: In 3 Pages or Less
By Gary Pilarchik LCSW-C
 
 
I set to challenge myself and I challenge all that might read this to create an American income tax plan that is under 4 pages. America is in the midst of a revolution and I hope it is lead by an enlightening flame and not a burning fire. The complexity of the American income tax code is proof enough to recognize the break-downs and short-comings of our current political system. No tax code needs to be as complex as the one we have now, unless you want to hide something. I would argue what is hidden are methods to make taxation inequitable and unfair in a way that seems well… fair. Silly complexity, if you really think about it and no salient action to simplify it. I wonder why?
 
Income tax is not the right of the government and government is not the right ‘of the people’. We are one group living as a civilization to maintain our world in a way that is mostly fair and equitable. In other words the people and government are not two entities but one that are not mutually exclusive or functionally different. Yet, we seem to have reached the point where our perception has become our reality. We are taking sides in a revolution between the ‘1% and 99%’ and on these sides stand rhetoric and barriers to sensible change. We are reaching an impasse and before it is fully sealed, change for the 99% must occur in form and not verbal fodder.
 
Taxation should be fair as defined by the people that are being taxed. An understanding between perfectly fair and mostly fair should arrive at the point of being mostly fair. Difficult decisions in ’fairness’ should lean toward the masses or 99% and not the 1% of people. That in itself is mostly fair. Taxation should not be defined by the need of the government but by fairness to the people. What does that mean? An income tax plan should be viewed as mostly fair by most of the people most of the time. In order for this to happen the complexity of the current American income tax code must be simplified. Most of the people have not read nor do they understand the complexity of the current income tax code. Shear volume, defined by pages, creates a barrier to reading the code. It simply is so large, by design, as to be a purposeful barrier to understanding whether or not… income tax is fair or even mostly fair.
 
I based my design on fairness. All people are taxed the exact same way. Income tax is no longer a function of total income but on a continuum of income. Each portion of one’s income is taxed at a different rate. The idea is based on the fact that wealth can only be achieved if all people agree to follow the rules of their society. Wealth is not purely a function of an individuals ability or life status but based on their ability to earn, have or keep wealth within a civil society. In order for all of us to have our freedoms (which includes wealth), we must participate in being civil as one group. Without civility we would not have opportunities to be wealthy. Therefore, we all participate equally in our freedoms to earn money and live freely in America.
We should all be taxed equally.
 
A flat tax rate is not truly a fair and equal tax. It sounds fair and logically but it isn’t. My model of American income tax is based on a continuum of income. Each American is taxed the exact same way across the continuum of their income. It is similar to a flat tax but the tax rate changes based on income ranges. Any time an American has income that falls into a specific range, they pay taxes at that rate for the portion of their income that is within that range. It already sounds a bit complicated but consider income like a bar graph. The higher your bar graph the more tax zones your income will cross.
 
I would argue that taxing the first $24,000 of someone’s income that makes $30,000 a year with a flat tax is not comparatively equitable or mostly fair when taxing the last $24,000 of someone’s income that makes $524,000 a year with the same flat tax rate.  The tax rate should vary across income points or across a continuum of income earnings. Each American is taxed the same amount when their income reaches specific income points. Each American is taxed the same for income that crosses specific income points not matter what their total income is.
 
My premise is that the first $24,000 of income for most Americans, most of the time, goes directly toward ‘buying’ the necessities to live. In a nutshell; housing, utilities, food, medical care, education, and other basics. My model would allow the first $24,000 of income, of every single American to be earned with a 5% income taxation rate. I would even consider no taxation for the first $24,000 of income.  It doesn’t matter if your total income is $30,000 or $524.000. The first income point is $0 – $24,000 with an income tax rate of 5%. There are many reasons for this aspect of my model that I will elaborate in another paper. These reasons include reducing government benefits by making working a better incentive versus being deemed unemployable.
 
The American income tax model I suggest taxes on a continuum of income. As you progress in wealth and income, your additional income is taxed at a different rate. All Americans, in theory have a chance to earn millions, therefore all Americans are taxed equally and fairly as they earn more. All Americans receive the exact same income tax rate at different points using this continuum income taxation model.  No one is treated differently. As you earn more or less, your total taxes may change.
 
 

The Continuum Income Taxation Model:

 

Tax Rate

$18,000

Yearly Income

American 1

Income Tax Paid

58, 000

Yearly Income

American 2

Income Tax Paid

$1,253,000

Yearly Income

American 3

Income Tax Paid

5% Tax

0-$24,000

$18,000

$900

$24,000

$1,200

$24,000

$1,200

12% Tax

$24,000-

$48,000

N/A

N/A

$24,000

$2,880

$24,000

$2,880

14%Tax

$48,000-

$96,000

N/A

N/A

$10,000

$1,400

$48,000

$6,720

16% Tax

$96,000-

$192,000

N/A

 

N/A

 

N/A

N/A

$96,000

$15,360

18% Tax

$192,000-

$384,000

N/A

 

N/A

N/A

N/A

$192,000

$34,560

20% Tax

$384,000-

$768,000

N/A

N/A

N/A

N/A

$384,000

$76,800

22% Tax

$768,000-

$1,536,000

N/A

N/A

N/A

N/A

$485,000

$106,700

24% Tax

>$1,536,000

N/A

N/A

N/A

N/A

N/A

N/A

Total Income Tax Paid

For Each

American

$18,000

Income

$900

Income Tax

$58,000

Income

$5,480

Income Tax

$1,253,000

Income

$244,220

Income Tax

 

At each income threshold or range the income taxation rate changes. This model taxes incomes at specific ranges. All Americans are taxed exactly the same where their incomes fall into like income tax rate ranges.  A flat tax is not equitable. A tax rate based on total income minus a plethora of deductions is not equitable. This model is mostly equitable. All Americans are taxed for the same amount where they have like ranges. For example, all Americans are taxed exactly the same amount for their first $24,000 of income and so on without regard to the variability of the total yearly income across Americans.

 
The only deductions for this model of income taxation is mortgage interest on your house of residence and interest on educational loans. There are no other deductions.
 
The ranges of taxation 5%, 12%, 14,%, 16%, 18%, 20%, 22%, and 24% can be adjusted but must be adjusted equally. If you change the 24% range to 23% then all range must drop by 1%.
 
By simplifying the current tax code to have only 2 deductions, you can create set taxation rates that equally and accurately tax the same range of income for all Americans. No longer will you have someone making millions (Buffet) and pay 18% in taxes because of the insane number of deductions used while the American making under $100,000 a year pays 30% in taxes. There is no deduction game. This model lets everyone know exactly what is paid out in income tax for your portion of income that crosses a range. It is mostly fair.