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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

New York Times, Business Day, Feb. 21, 2012
Tax Code Not Aligned with Basic Principles
by Bruce Bartlet

Mr. Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.” He opines:
... income from capital is lightly taxed. Unrealized capital gains are untaxed, realized gains are taxed at a maximum rate of just 15 percent, and gains held until death are never taxed. ... The point is that a tax system that lightly taxes capital and heavily taxes labor is necessarily going to benefit the wealthy.

... the tax system in the United States violates the fundamental principles of income taxation. Those are “vertical equity,” which says that those with upper incomes should pay a higher effective tax rate than those with modest incomes — as far back as Adam Smith, ability to pay has always been a core principle of taxation — and “horizontal equity,” which says that those with roughly the same income ought to pay roughly the same taxes.

2-4-8 Response: Political Tradeoff for Tax Equality

More tax expenditures (a/k/a loopholes) are not the solution. They are good for the business of lobbyists, tax attorneys and accountants; and are very good to encourage political donations from grateful businessmen.

The political dysfunction on all sides makes it hard to formulate a political scenario whereby even basic tax reform (i.e. eliminating the preferential tax expenditures) might be achieved. Try to imagine a tax reform that realigns traditional political alliances and also fixes the issues of unemployment and economic mobility.

The 2-4-8 Tax Blend broadens the tax base by including and taxing individual net wealth at 2% (over $15,000), retail sales at 4% and income (individual and corporate) at 8%. The broad base enables the lowest possible tax rates and the blend is inherently progressive even though rich and poor pay the same rate. It would yield $2.6 trillion – ($400 billion more than FY 2010 federal revenue).

Because the 8% income tax rate is lower than the various tax expenditures, it becomes a feasible political tradeoff for the elimination of tax expenditures. The concurrent elimination of payroll, estate, gift and capital gain taxes would enable most to keep about 22% more income each year.
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