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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

Bloomberg and San Francisco Cronical/SFGate, Feb. 16, 2012
Two Tricks to Raising Capital-Gains Taxes Fairly
by Ray Madoff

Ray Madoff, a professor at Boston College Law School, is the author of “Immortality and the Law: The Rising Power of the American Dead.” Professor Madoff opines:

... Profits from investments are taxed at a maximum rate of 15 percent, which is less than half the 35 percent maximum tax rate imposed on wages and other ordinary income. One can hardly open a newspaper or click on a blog without seeing a call to eliminate this special rate for capital gains to increase fairness and raise federal revenue.

... To achieve true fairness and generate increased revenue, however, it is necessary to make two more changes -- to allow capital-gains taxpayers to account for inflation and to close the loophole that allows wealthy Americans to avoid capital- gains taxes altogether by passing on assets at death.

Account for Inflation

. ..A fairer system would impose regular tax rates, but allow taxpayers to account for inflation when calculating gain. This fix was proposed in the 1980s, but rejected at the time as being too complicated for the average taxpayer.

2-4-8 Response: Capital-Gains Taxes

Professor Maddoff’s suggestion to adjust capital gain values to inflation and to increase the estate tax by adjusting for capital gain is said to be justified by fairness and to increase government revenue. I believe the adjustment for inflation may leave little for the taxman to collect and may yield an effective rate even below 15%. As for fairness, the very idea of capital gains is unfair because it selects certain assets (i.e. securities, precious metals, real property, etc.) and declares that any change in value over time is a gain (or loss) to be computed as income. The unfairness in the selection of taxable assets is further compounded by the years of tax avoidance (if and until the asset is sold) and the ability of accountants to offset gains with losses. The tax structure is an invitation to transfer assets among corporations and individuals in less than arms length transactions and at times which are dictated by tax considerations rather than business considerations. The charitable giving of appreciated assets has also resulted in extraordinary government subsidies for the select causes of the well-to-do – (Planned Parenthood, Media Matters, etc.)

It’s time to realize that the tax code is badly broken and has been made worse over the years by good intentioned people attempting to tweak it to accomplish some admirable goal. The unintended consequences are the twin elephants in the room: a $15 trillion national debt and an unprecedented accumulation of wealth by a small number of people (who literally have more net wealth than they know what to do with). The solution must be bold and it is one that would not have been practical 10 or 20 years ago (before the age of internet databases and computational tools). It is one that accounts for appreciation of assets each year without taxing the gain as income. I call it the 2-4-8 Tax Blend.

The 2-4-8 Tax Blend 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 tax rate. Even the “fair and balanced” Bill O’Reilly (a/k/a the Factor) supports a national sales tax (of 3%) as a necessary component of tax reform. The concurrent elimination of payroll, 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 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 save and keep 22% more salary each year (conservatively assuming the 2% wealth tax was offset by 4% investment interest). Now that’s fairness and 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