Reforming the Tax System

The Capital Homestead Act would radically overhaul and simplify the Federal tax system to eliminate budget deficits and ownership-concentrating tax barriers through a single rate tax on all individual incomes from all sources above basic subsistence levels.

Tax reforms under the Capital Homestead Act are designed to:

•  Stimulate economic growth and jobs.

•  Be more transparent and more accountable to taxpayers.

•  Simplify the existing Federal tax system to automatically balance the budget.

•  Keep more money in the pockets of taxpayers from their initial earnings to cover their own health, education, housing and other basic household living expenses.

•  Make Congress more directly accountable and responsive to all taxpayers.

•  Eliminate all tax provisions, personal deductions, tax credits, and exemptions (except for the front-end exemptions for adults and dependents) that unjustly discriminate against or discourage property accumulations and investment incomes for poor and non-rich families.

The major tax provisions of the Capital Homestead Act are:

a) eliminate payroll taxes on working Americans and their employers;

b) integrate corporate and personal income taxes;

c) exempt from taxation the basic incomes of all citizens up to a level that allows them to meet their own subsistence needs and living expenses, while providing “safety net” vouchers for the poor; and

d) change inheritance tax (“death tax”) on the estate to a tax on the recipient receiving an inheritance above a level of “capital self-sufficiency (e.g., $1 million in accumulations). This would encourage the wealthy to democratize ownership among all members of their family, workers who helped create their fortune, or any other citizens lacking capital self-sufficiency.

For example, a single tax rate on all sources of labor or capital income over exemptions would be automatically set to meet all Federal entitlement and other programs, and to pay down past deficits. To meet personal living costs the basic incomes of all taxpayers up to $30,000 per adult and $20,000 per dependent (or $100,000 for a family of four) would be free from any income or payroll taxes. To increase taxable income incomes for all citizens, corporations could escape from the multiple tax on corporate incomes by deducting dividend payouts.

 

Recommended readings:

•  “Capital Homesteading for Every Citizen: Reforming the Tax System,” Norman G. Kurland, Dawn K. Brohawn, and Michael D. Greaney, Tax Notes (TaxAnalysts), October 24, 2005 (PDF)