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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

Wall Street Journal, March 26, 2012

Do the Rich Work Less as Their Taxes Increase?

by Robert Frank

Robert Frank, a senior writer for the Wall Street Journal and author of the newly released book “The High-Beta Rich”. Mr. Frank opines:

... The idea of “going Galt” has been a key argument for those opposing higher taxes on the rich. The wealthy, according to the argument, are just like everyone else when it comes to incentives. If you tax their income above a certain rate, they will stop working, stop creating jobs and stop creating wealth that gets spread around the economy.

... According to the data, “affluent households are unlikely to make substantial changes in their ‘real’ economic behavior in response to modest tax increases.” ... Jeffrey Thompson at the University of Massachusetts Amherst Political Economy Research Institute ... finds that “high-income households did not alter their labor supply in response to large federal tax changes.”

2-4-8 Response

The behavioral psychologist B. F. Skinner was a pioneer in the study of positive and negative reinforcements which direct individual behavior. Negative reinforcers encourage behavior by reducing the application or threat of punishment. Negative reinforcers, like punishment, also produce undesirable side effects which are associated with anxiety and fear. Positively-reinforced behavior is strong and active and is generally associated with feelings of freedom and happiness. Interestingly, a gradual and somewhat arbitrarily stretched schedule of reinforcement was found to strengthen behavior more than a constant schedule. These individual rules may be less reliably applied to collective business decision making.

Predictably, any business path that leads to increased profits (and particularly a long and winding road) is going to be viewed as strong and positive. Tax rates, like other costs of doing business are going to be negligible in the grand scheme of things to the extent they are predictable and adjustment can be made as they are for all other costs of doing business.

Economists like to speculate about how business behavior might be affected by a scheduled increase or decrees in the tax rate. It is here that a distinction must be made between a tax on earnings and a tax on a business (which may or may not be a C corporation). Arguably, the business profits and pricing are determined not just by costs (including taxes) but rather on competition. Where there is little competition, a presumably profitable company might be expected to reap added profits from any tax reduction. Where there is strong competition a tax reduction would be more likely to result in a price reduction to increase market share. In aggregate the competitive businesses are not likely to realize much from a tax reduction.

In regard to individual tax reductions it is difficult to see how this would impact job efforts. Like the automatic raises of career civil servants, the incremental reward or tax reduction has nothing to do with past behavior and is unlikely to impact future performance. In this since a tax reduction may be considered a noncontingent reinforcer because it is not intended to direct any particular behavior.

A dynamic tax structure such as a 2% net wealth tax combined with an 8% flat income tax can turn the tax code into fuel for the economy. The taxing of net wealth is not only fair and progressive, it also serves as a negative reinforcer to use the wealth productively or suffer a long gradual diminishment of assets. The low flat rate income tax enables all earners to keep 92% of their earnings, enhancing the rate of economic mobility and supplying the consumer power that drives the economy. See www.TaxNetWealth.com for more details.


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The term “going Galt” comes from Ayn Rand’s elusive hero in “Atlas Shrugged,” John Galt

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Copyright 1985 to 2015 by Eugene Patrick Devany