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NEW - In 2016 the 2-4-8 Tax Blend will become 2-4-8 Tax Choice
The "choice" would allow all taxpayers to choose an income tax rate between 8% and 28% paired with a net wealth tax rate of 2% going down to zero. Wealth taxes paid would reduce Estate and Gift taxes (also set at 28%). This would encourage wealthy individuals to pay some net wealth taxes as a form of inexpensive life insurance.


C - Corp
4% VAT
8% Income

The American Prospect, Feb. 14, 2012
Three Big Tax Lies
by David Cay Johnston

David Cay Johnston, a Pulitzer Prize–winner and Reuters columnist, teaches the tax, property, and regulatory law of the ancient world at Syracuse University College of Law. His new book, The Fine Print (Portfolio Hardcover), will be published in September. He opines:

... Yet concerning taxes, which finance our civilization and distribute the cost, three great lies permeate society, all of which delay our doing what needs to be done. The first lie, with a nod to comedic candidate Jimmy McMillan, is that the tax is just too damn high. The second lie is that if you cut the rates, revenues will increase. The third lie is that taxes have become too complex for even an Einstein to understand.

... Despite all the political rhetoric about excessive taxes, federal tax revenues are at their lowest point since Harry S. Truman’s presidency. In Barack Obama’s first three years, federal taxes slipped from a little less than 15 percent of the economy to 14.4 percent, far below the 17.6 percent to 20.6 percent range from Ronald Reagan through George W. Bush.

... the individual income tax brought in a third less revenue in 2011 than it did in 2001, when the Bush tax cuts began. ... nonfinancial corporations at the end of 2009 were hoarding more than $3 trillion in cash, .... That’s $10,000 of idle cash per American, a vast reserve army of capital as much in need of employment as the 24 million or so Americans who can’t find a job or as much work as they want.

2-4-8 Response

The article touches upon a few hot button issues (i.e. size of government, tweaking the tax brackets and tax complexity) but overlooks the twin elephants in the room – national debt and accumulated wealth. You correctly identify the misguided and successful political war to “starve the beast” of government without seeing that the resultant $15 trillion in national debt has miraculously morphed into more surplus accumulated wealth of a few.

If we expand the tax base we can we can lower the income tax rate, maintain progressivity and have the same brackets for the rich and poor. The solution is the 2-4-8 Tax Blend which broadens the tax base by taxing net wealth at 2% (above a $15,000 exemption), retail sales at 4% and income at 8%. It would yield $2.6 trillion – ($400 billion more than FY 2011 federal revenue). The tax blend is progressive even though rich and poor would pay the same rates. The concurrent elimination of social security, capital gains, estate and gift taxes; and a significant reduction of the corporate income tax rate to 8%, should guarantee near universal support from social liberals and business conservatives alike.

Please think outside the box before you react. Try to contrast a 30% income tax (the Buffet Rule rate or the rate paid by the middle class when the payroll tax is included) with an 8% income tax joined with a 2% wealth tax for each of the next 11 years. The latter combined income-wealth tax would permit an individual to keep 22% more salary each year. If one saved just the 22% extra take home for 11 years it would amount to several years’ salary in the bank - a very nice retirement fund, (conservatively assuming the 2% wealth tax was offset by 4% investment interest). Now that’s real economic mobility!

How would an 8% corporate income tax affect jobs and the economy? Those answers may be better left to your talent and imagination.

Eugene Patrick Devany, JD. MPA



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Copyright 1985 to 2015 by Eugene Patrick Devany