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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

Governing, Feb. 9, 2012
Could a Flatter Federal Tax Plan Actually Work?

A centrist plan with a progressive twist could be a bipartisan compromise.
And it could help balance the budget

by Giraid Miller

The Governing Institute advances better government by focusing on improved outcomes through research, decision support, and executive education to help public sector leaders govern more effectively. Girard Miller the Public Money columnist for GOVERNING and a senior strategist at the PFM Group. Mr. Miller opines:

... First, Romney should propose a basic flat tax rate of somewhere in the 15 to 19 percent range,

... almost all itemized deductions must go, except for mortgage interest and medical expenses.

... the lowest one-third of tax returns should be free from federal income taxes altogether by exempting the first $20,000 of income

... At the upper end, the top 2 percent of taxpayers in their respective household categories should then pay a 28.4 percent rate on all their income above those levels ... Deductions and exemptions would be phased out for taxpayers in the top 3 percent, which is also roughly $200,000 per household for all sources.

... Reagan also agreed to equalize the tax rates on investment and ordinary income, just as I have suggested.

... I realize that many readers have diverging views of tax policy, and that most readers of the Governing e-letters are state and local officials who don't themselves set federal tax policy. But it's worth thinking more deeply about how federal tax reform could work, and how it would impact state and local finances.

The 2-4-8 Tax Blend eliminates capital gains. At the risk of oversimplification, try to contrast a 30% income tax (the Buffet Rule rate) with an 8% income tax combined with a 2% wealth tax. The combined income & wealth tax would permit an individual to keep 22% more salary each year. It would be like saving a year’s take home pay every three years compared to a 30% payroll/income tax rate (conservatively assuming the 2% wealth tax was offset by 4% investment interest).

If we tax net wealth at 2%, sales at 4% and income at 8% the three taxes would yield about $2.6 trillion per year (slightly [$400 billion] more than the current combination of Income, Social Security, gasoline and other federal taxes and fees). There would no different tax brackets, credits, and no favoritism.

It is hard to imagine anyone that wouldn’t welcome a 2% tax on net wealth and a small 4% sales tax, in exchange for drastically reduced 8% individual income 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 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.

The 2-4-8 Tax Blend expands the tax base to achieve the lowest possible rates (while yielding about the same government revenue). Upward mobility is encouraged by lowering the tax burden on earned income. A corporate tax rate of 8% should be a very big plus for job creation and the economy. The broad base and low rates also minimize the impact on the varied state tax structures.

Eugene Patrick Devany, JD, MPA


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Copyright 1985 to 2015 by Eugene Patrick Devany