ii iv viii	Merry Christmas and Happy New Year 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.	Wealth 0% 0.5% 1% 1.5% 2%	Income 28% 23% 18% 13% 8%
		Business C - Corp	4% VAT 8% Income

Matt Campione's encyclopedic knowledge of the complex tax code has earned him a national reputation as the tax attorney with whom industry insiders consult when they need help or a different perspective. During his more than 35 years as a tax attorney, Campione estimates he has saved clients more than a billion dollars. He opines:

.... Whether our federal tax system is progressive enough has been a major focus of attention the past few years.

... A progressive income tax based purely on affordability and ability to pay would at some point approach a 100% marginal tax rate after a threshold of perhaps $15 or 20 million of taxable income.

... So let’s say for hypothetical purposes the maximum rate for taxable income over $15 million was limited to 50%. Further, let’s assume the progressive rates for taxable income between $1million and $15 million ranges between 25% and 45%. This could be accomplished through a more robust Alternative Minimum Tax (AMT) ...

2-4-8 Response

Mr. Campione’s broad knowledge of the income tax system leads to his conclusion that tax reform, “based purely on affordability and ability to pay would at some point approach a 100% marginal tax rate”. He also concludes that, “we must attack federal debt and deficits with a combination of revenue increases (from upper-income households as well as the rich), spending cuts and curtailed spending increases.” He anticipates at least 5 to 7 years of federal belt tightening and higher taxes for the well-to-do.

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%, 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 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) 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% for 11 years it would be like having a very nice retirement fund in the bank, (conservatively assuming the 2% wealth tax was offset by 4% investment interest). Now that’s real economic mobility!

I am not sure how an 8% corporate income tax would affect jobs and the economy, but it can hurt.

Eugene Patrick Devany, JD. MPA

www.TaxNetWealth.com

 

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Copyright 1985 to 2015 by Eugene Patrick Devany