Sunday, April 15, 2012
The Tax Collector
Our current socio-economic set up has turned our employers into the tax collectors and the primary source of our medical care. My goal is to break this dependency.
The Object Tax (Introduced in the Previous Post) has tax collection taking place in a bank.
The tax works as follows: You get your entire paycheck, with no taxes withheld, into a bank account. I will call this a pre-tax account. To spend the money, you need to transfer it to a post-tax account at a personalized progressive tax rate.
So, let's say you had $10,000 in your pre-tax account and your personal tax rate was 10%. You would only be able to withdraw $9,000. Let's say you withdrew $1,000 from the account. You would pay a $100.00 tax and get $900.00 in cash.
This system turns the banks into the tax collectors. Since banks are equipped to process money, this is the right and proper place to collect the taxes.
In this system, your retirement savings, health savings and rainy day savings can all gain interest in a pre-taxed state. It is only when you prepare to spend the money that you pay the tax.
This object tax is a de facto consumption tax.
Most consumption taxes, like the FAIR Tax and Sales Tax, turn our nation's merchants into tax collectors.
The object tax allows us to recreate all of the deductions and exemptions of the current tax code. Instead of a deduction, the program allows select expenses to be made tax free. If your $1,000 medical bill was deemed to be tax-exempt, then you could pay it from your health savings account without paying a tax.
The Object Tax eliminates the capital gains tax while satisfying the Buffett Rule.
Your investments will sit in a pre-taxed state. You can exchange one investment for another without having to pay a tax. I could sell stock A and buy stock B without having to pay a tax.
When a person goes to transfer money from an investment account to a spending account, that person would be socked with a progressive tax.
The progressive tax rate would be based upon a combination of a person's income and their networth. A billionaire like Warren Buffet would be taxed at the absolute highest rate on all of the money that he transfers to his personal accounts for spending.
Currently, America has two tax systems: There is one tax system for business owners and a second patronizing tax system for employees. The object tax creates one simple account based tax system for all people. The taxes are handled at the bank, which is equipped to handle transfers of funds. It eliminates the tax withholding, W9 forms, etc..
The Object Tax is a personalized progressive consumption tax structure that would help families take control of their budgets while providing the revenue for their company to thrive.
If your group would like to learn about this tax reform or about the Medical Savings and Loan, you can contact me.