Trump Should Propose a 15% Single Tax Rate for All
The corporate tax rate, capital gains and all personal income should be taxed at a 15% single rate.
In a recent speech, presidential candidate Donald Trump proposed, among other things, a 15% corporate income tax rate. He has also said that he wants to reduce the capital gains tax rate perhaps to 15%. Maybe he should consider a 15% tax rate for all personal and corporate income taxes.
Although there are studies with conflicting conclusions, logic tells us that lower tax rates will lead to higher economic growth. That’s because the lower tax rates will give households more money to spend and save. The increase in spending raises consumption and stimulates market-driven growth.
The increased household savings will increase capital formation which will lead to more capital available for business to expand.
Lower corporate tax rates will increase corporate retained earnings and provide more capital for growth. That will lead to business expansion.
While addressing lower taxes, perhaps we should answer the question, “Why is labor taxed at a higher rate than capital?”
If the corporate tax rate should be 15%, and the capital gains tax rate should be 15%, why should personal income be taxed at a progressive rate that could be as high as 37%?
The answer is that it shouldn’t.
Perhaps now is the time to discuss a complete overhaul of the federal income tax code. The goal should be to make the tax code simpler and easier to administer. The new code should also raise sufficient tax revenue. And the code should be equitable.
A new tax code could be based on what I refer to as the Busler Single Rate Tax plan. It would look like this:
For all households, a 15% single rate tax on all income above a livable minimum (perhaps twice the poverty level). All income from wages, rent, interest, profit, dividends or capital gains would be taxed at the same rate. There would be no deductions for anything. Also, the corporate tax rate would be 15%.
This plan makes it very easy to calculate the tax liability for each household. The livable minimum for a family of four would be, say, $50,000, meaning the first $50,000 of income, regardless of how it is earned, would not be taxed. Above $50,000 every dollar of income is taxed at 15% no matter how much income is earned.
If a family of four earned an income of $70,000, they would subtract the livable minimum of $50,000 and then pay 15% of the remaining $20,000, meaning their tax liability would be $3,000.
As income increases, tax liability would increase by 15% for each additional dollar of income. If a household earned $1 million, the tax liability would be $142,500. The tax paid would increase proportionately as income increases.
Total tax revenue would be similar to revenue collected under the current tax code for perhaps the first year. After that, this plan should accelerate economic growth so that tax revenue will grow much faster than it would have under the current system.
This plan is very easy to administer. The tax liability calculation for each household would be very easy to determine with just a calculator. No need for an expanded IRS to evaluate every taxpayer’s deductions. There are no deductions.
Some will argue that this plan is just a tax break for the wealthy. While the effective tax rate for the wealthy would decline, they would have more capital to invest which would eventually increase their income and increase the amount of taxes that they pay. Remember, the goal is to increase tax revenue from the wealthy which would happen.
This plan treats every household exactly the same. No favorites with tax deductions. And above the livable minimum, which may be adjusted for circumstances, every taxpayer is treated exactly the same.
This has always seemed fair to me and the right plan for the majority of Americans.
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Isn’t it true that Corporations simply pass their taxes on to us? When a car is built, there are contractors involved: one to build the engine parts, one to assemble the engine, one to deliver the engine to the assembly area, then the completed cars are sent to a retail distributor. Each one of these hand-offs, add 15%, per your suggestion. In my example, the 15% gets added on to each transfer. So guess who is actually taxed indirectly? The consumer who also pays income tax.
I recommend that Corp tax is 0%. With that decrease in taxes, Corps should lower their product prices by, at least 10%. They no longer need tax prep either saving even more money.
Next there should be No income tax. Instead, with each purchase, 10% Federal tax is also paid. Each month every retailer pays those taxes to the Dept of Treasury. There is no more need for the IRS. During the Trump Admin, US consumers bought about $56T of stuff. 10% of that would be $5.6T. That should be enough for the Fed.
Here’s the hard part. There would need to be multiple Amendments added: Congress can’t add back an income tax. Congress can’t change the retail tax percent. There is a priority to spending: 1. Debt at $1T/yr. 2. Debt Int $1T/yr that drops every year as we pay the debt. 3. DoD $1T/yr with the addition of CBP, Sec.Svr. No need for the FBI, DEA, ATF. States need to deal with the Federal land in their State or shared by multiple States. Crime involving more than 1 State needs to be coordinated between them. No other Federal Agency may carry guns except the DoD. 4. Social Security payments (whatever is required) I recommend no more Social Sec. paycheck payments nor Medicaid payments. Social Sec. will be funded with the retail tax only. No more FUTA either. 5. Everything else. Congress may have power over this remaining amount. Spend wisely. Currently Soc. Sec. requires $1T/yr. That leaves $1.6T for Congress to oversee. No more new SS recipients. Those who have paid into SS for < 5 yrs won’t get SS, so plan accordingly. No more need for 401k, nor IRA. Companies should just add more pay for each person instead of 50% of a max of whatever.
The only way to change the retail tax percent is by 4-year Presidential vote where both the President and this change in retail percent goes through electoral vote. No more Congressional power of the purse. The US citizens have that power. 37 years from now the debt will be paid.
I recommend that a lot of Agencies be dismantled: TSA, ODNI (use NSA as the lead Intel Agency), CIA because Clinton released the name of the Doctor who told us where Bin Ladin was. No one trusts the US anymore. DHS (DoD is the only external defender. Police are the interior defender), Dept. Ed. (Test scores suck since they started. Dept. Of Labor will do their job). EPA needs to have authority decreases to super site cleanup. USDA will lose authority to “help” farmers. Let the Farmers do what they want. FDA, CDC failed us during COVID. The NIH needs to be decreased in scope as well. Research, yes. Ft . Dietrich will deal with infectious diseases. The CISA is corrupt. Replace it with NSA public info. They currently have systems that can evaluate network traffic and stop it if needed in real time.
Thank you for reading all this. It’s me dreaming. But it’s based in good changes. Thoughts/questions welcome. No insults please..
Hi Nathan,
Most of what you are saying makes sense. Some of it may not be politically possible. The area where my opinion differs is your suggestion of replacing an income tax with a consumption tax. the reason is that any taxes on consumption are regressive, meaning the lower income earners have a greater tax burden. That’s because lower income earners spend all of their disposable income and would be taxed on all of it. Higher income earners spend only a portion of their disposable income and would therefore be taxed on only a portion of their income.
Hi Michael, You’re right about how the 10% flat consumption tax works. My hope, yep it’s far fetched, would be that with the 0% Corp tax, that going from Trump’s 21% tax, that they would lower their prices by more than 10%. (Hope being one of my plans downfalls). It could be helped by a set of web pages by the DoTresury showing previous prices of products sold by each Corp. compared to post 0% tax prices.
Every person pays 10%. The rich have more disposable income as you mentioned, but I don’t believe in forcing the rich to pay more and the poor less. My wife and I are considered poor. I’m on SSDI. I believe that what is happening is spiritual/moral. The rich shouldn’t be vilified nor should the poor be treated with kit-gloves. We should all be treated equally. You’ve heard the expression, “Democrat city plantations” when referring to their inner cities. Entitling them does not encourage the poor to work. You might call regression taxing “tax discrimination”. Allow the rich to dispose of their income as they see fit. Not all the rich are greedy.
That extra income to the rich will help them consider investing in data centers and other manufacturing like steel. These Corps no longer need to worry about taxes nor depreciation nor paying tax preparers nor setting aside emergency funds for sudden increases in taxes. Despite my disability, I used to own a single person LLC where my company made $200K/yr. I remember my quarterly meetings with my tax preparer.
Not everyone is like me, but I believe part of the MAGA movement is freedom to care for others, freedom to sacrificially love others. No matter their income level. We are US citizens and the poor, especially me, would gladly pay 10% as long as the priority of spending was kept in place. I would know I’m joining in the battle to support a less corrupt Government. It’s the patriotic thing to do. I believe the rich, having the freedom to spend their money, would be more giving, investing in America First.
As you can tell I’m verbose. The point is, everything purchased becomes at least 10% cheaper and potentially each worker gets paid more. Licensed daycare is 10% cheaper. All these 10%+ decreases will help the poor to pay the 10% tax on items they purchase. It will be a wash. But please correct me if I’m wrong.
One of the things we hate is when the Government forces us to do something, anything. The wealthy don’t mind paying extra, but they are being forced to do so. That is not liberty. That is a small form of tyranny or as I mentioned above, “tax discrimination” or “wealth discrimination”.
As we hopefully have learned, everyone under a Government which stops controlling and gives We The People choice, we have freedom. When the Government controls anything, it destroys our freedoms. This includes our being taxed.
Thank you so much for reading this. As I mentioned, I’m poor, disabled. My disability keeps me from creating or being apart of any social network. I surely (yes I know your name is not Sheryl 🙂 ) do not have all the info on taxes, finance. Use what you want from what I’ve mentioned. Again I really appreciate you reviewing what I wrote and your response.