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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 5, 2012

Tangled Tax Code Primed for Pruning

by John D. McKinnon

Mr. McKinnon is optimistic about tax reform, … President Barack Obama's business-tax-overhaul plan underscores the growing likelihood of a serious effort to revamp the nation's much-criticized tax system … The question now isn't whether a tax rewrite will happen, but how far it will go, and whether it will stop at business rules or also extend to individuals. Increasingly the answer appears to be that the entire tax code, all 70,000 pages, could be in play.

2-4-8 Response

I have spent a lot of time speaking with academics about tax reform plans that are on the fringe of the political radar. My particular interest is in a tax mix of wealth, consumption and income that I call the 2-4-8 Tax Blend. I want to toss out the idea because I am looking for anyone who can identify a policy flaw or logical argument against the plan rather than the obvious political long shot argument. I thank you for your consideration and enjoy!

We need to eliminate tax expenditures (a/k/a loopholes) and expand the tax base to enable the lowest tax rates. It would be far better to tax the $53 trillion net wealth of everyone at 2% (over a $15,000 exemption) and the $12.5 trillion income of everyone at 8% (bringing in about $2.1 trillion). By eliminating payroll taxes (and paying social security and Medicare from general funds) all individuals get to keep 92% of their income creating significant economic mobility and wealth. Because the rates are the same for rich and poor it would also be the fairest tax system on the planet.

The increase in consumer power from individual tax reform will boost the economy but business tax reform is also needed to shift the economy into high gear and to raise some additional revenue. Every developed country except the United States has a business sales tax in the form of a Value Added Tax (VAT) paid by business. A 4% tax on $10 trillion in sales would yield another $0.4 trillion in revenue. The taxable income from C corporations is about $1.1 trillion (FY 2010) and produces only $191 billion in government revenue. Loopholes and overseas tax deferrals have resulted in some very profitable international companies paying no taxes. A reduction of the corporate rate to 8% might be a fair and politically feasible tradeoff for an elimination of the tax loopholes and unneeded deferrals. The VAT in combination with the reduced corporate rate also reduces the double taxation issues that arise from the way C corporations are taxed as compared with flow-thru businesses.

The political icing on the 2-4-8 Tax Blend cake is that taxes on capital gains, estate transfers and gifts would not be necessary - restoring economic freedom to the lifetime planning decisions of the investment class.

The 2-4-8 Tax Blend is too good to be true – why not?.

Eugene Patrick Devany, JD, MPA


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Spread the word: Please let Congress know you want them to consider the 2-4-8 Tax Blend by simply tweeting "TaxNetWealth.com" or by copying any basic description and sending, faxing, or emailing it to at least one representative from each political party. Many representatives will only accept email through their individual websites.

Copyright 1985 to 2015 by Eugene Patrick Devany