My super duper perfect federal income tax plan.

Ya right!

What I outline below has a few primary goals:
– Bring taxing policy to the state level
– Remove tax policy (who pays what) from the national debate.
– Reduce the opportunity for special interests to get national tax benefits.
– Allow states to experiment with policies
– Allow states to enact tax policies that represent the values of the majorities in those states, rather than the country as a whole.

The plan is simple, I will discuss it in as it relates to individuals and it is towards individuals I think we should first implement this change.
The average personal federal income tax rate paid in 2014 was 14.16%. That is, if you take all the personal income X 14.16% you get the total income tax collected. I will use 14% as a baseline example in this discussion. *1

The plan:
1 – The Federal government only sets this average rate, 14% in 2014 for example.
2 – Each state determines their tax policy to collect this average rate and pay to the federal government. For example, Kansas could have a flat 14% income tax. California could have a highly progressive tax rate which has an average is 14%. Nevada, which currently has no income tax, could collect an amount which adds to 14% by raising the sales tax. Washington, another state with no income, could increase there property tax or add an income tax.

How does this policy achieve my goals?
– This is now a state issue
– When someone runs for national office the only tax policy they can talk about is, raising/lowing the average rate from 14% to 14.1% or 13.9%.  I can’t see anyone getting excited about that. In addition no more complicated winners and losers hidden in national tax policy bills.
– It is much more difficult for special interests to change policy in 50 states especially when some states are not even using a direct income tax. In addition, state elected officials are much more accountable to their constituents than federal elected officials
– As in my examples, states can have flat, progressive, property, sales or any combination they want. Let’s see what people want and what works.
– Each state can enact tax policies that represent the values of the majorities in those states, rather than the country as a whole.

Other Comments: 
– Who would be against this? Probably every federally-elected official, since it takes away their power.
– This does not affect the spending side of the federal governments, their ability to give money to special interests, or other stupid stuff.
– Spending is more transparent then taxing. In part because it is hard to put a number on tax not collected.
– The federal tax policy could be 1 sentence rather than thousands of pages.
– The IRS could implement and collect taxes on behalf of the states.
– Keep in mind each state already has some form of State IRS.
– I think we would end up with simpler tax policies.

Why would you support or not this policy?  Please comment I truly want to know:


Summary of the Latest Federal Income Tax Data, 2016 Update

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.