y=mx+b

Income tax time again. The politicians recognize that the tax system is way too complicated. And they all have a proposal to simplify the tax system. Here is mine.

First some definitions. Income is what you have coming in. It does not matter what it is, it goes on your “W-2” effectively in that it must be declared as income. Wages, salaries, and tips. Investment income, capital gains, gains from sales of property and cars. Airplane trips won in contests, airplane trips won gambling, airplane trips provided by you or your employer that go to exotic places for no real purpose. All income.

And you pay taxes on it. That is unless you get someone else to take it and put it on their “W-2”. You can give it to them, employ them, anything you want but it has to get to them from you. It has to actually go to somebody or some organization. That could by your housekeeper, your brother-in-law, your church, the Church-of-It’s-What’s-Happenin’-Now-Baby. It does not matter as long as it is not just you disguised as something else. If you keep it, hold it, retain it, its yours. This year. Income to you. It is no good buying something (except labor) with it because you still retain what you bought.
So how much tax? Well only two numbers matter in my system. What amount of income should result in NO income tax. Let’s call that number “b”. All of the rest is taxed at the same rate. To calculate your taxes, subtract b, the minimum income from your income. Multiply the result by the tax rate the Congress has set. Send in the money.

It is way too simple to sell. For one thing, there is no place for rich people to hide their money. So it will t-off the rich. And it does not gouge the rich people with a higher rate so the little guy will not like it either. But the fact of the matter is the little guy pays most of the taxes because he has no place to hide the money today. And the rich people do hide it, so the higher rate does not really impact them. One rate, one starting point. A fair and simple tax.

And what about all of those now-unneeded-tax-advisors and form-checkers. They can be gainfully employed keeping track of everyones money so everybody knows just how much they have when the music stops on December 31.