Punishing the Rich Is a Mistake

Over the last 20 years there has been a growing disparity in both income and accumulated wealth. The wealth of a few has increased as the national debt has climbed to over $15 trillion. Low interest money is plentiful and some corporations have so much they can park it overseas for years and avoid US income taxes. Government controlled retirement savings programs, such as the 401k, have also contributed to large sums of money that needs to be invested.

Your suggestion that the investment class needs further incentive to invest (as in “we should send the capital gains tax rate straight down to zero”) sound more like the middle finger of capitalism than the iron fist. We need real reform that includes transparency and a national net wealth tax before we can lower the income tax rate and eliminate the capital gains tax.

1) Make all business tax returns publicly available online for free. Cheating will be significantly reduced. The market will more easily identify businesses which are profitable and those which are losers.

2) Adopt the 2-4-8 Tax Plan which is a simple mix of three flat rate taxes: 2% on individual net wealth, 4% on retail sales and 8% on individual and corporate income. The exact same rates apply to the rich and poor. There are no different tax brackets, deductions or credits, and no favoritism. The three taxes would yield about $2.6 trillion per year (slightly more than the current combination of Income, Social Security, gasoline and other federal taxes and fees).

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 Bill O’Reilly (a/k/a the “Factor”) supports a national sales tax (of 3%) as part of much needed tax reform. The concurrent elimination of social security, capital gains and estate taxes and a significant reduction of the corporate income tax rate to 8% should guarantee near universal support for the 2-4-8 Tax Plan from liberals and conservatives alike.

3) Upward mobility, fairness, incentive for productive business and problem solved.

Eugene Patrick Devany JD, MPA

www.TaxNetWealth.com

Eugene Patrick Devany of NY 3:22PM January 31, 2012