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I'm all for looking into ways to simplify the tax code. I think this could be a way to do it.

I'll try to address two concerns that people seem to have.

1) Not enough taxing of the rich: I'll avoid the Rand arguements here, but just suggest that maybe look into Atlus Shrugged. But to be more definitive in my answer I'll say this. Rich people don't hoard their money in banks or cash under their mattress, they invest it. This investment can have a powerful effect on the economy, see the credit crunch. Imagine if wealthy individuals could invest more money, that should help increase liquidity in the markets.

The fact is that the increased investing power of the wealthy could help grow the economy, leading to more jobs and better pay which would be a good thing.

Also, look at it like this, Warren Buffet paid 18% or so federal income tax rate last year. Why? most uber rich earn with stock options and dividends, which are taxed at 18% or so, which is much less than the middle class actually cash pay gets taxed at. So as it is the system is not going after the rich.

2) Charities would not suffer as bad as some may think. First off Charities have tax exempt cards that they use to avoid paying sales taxes as it is. I know because I used to be a treasurer for one. Also, most charities rely on contributions from individuals and in that aspect the US is the most generous nation on the planet by far, and that is not national bias, it is fact. I believe the stat was the average US citizen gives about double what the next most generous nation gives in terms of percentage of their income. UK being number 2. I read the report awhile back, if I can find it again I'll link it.


Now to be fair I have my own concerns, mine is the housing market, which is already soft. Add on a 23% markup to home prices for taxes and it may collapse. Buyers won't pay it, so sellers will be losing a lot of equity which may spur foreclosures which would hurt the economy badly.

THe other issue I have is the lag time it would take between the two tax systems. There are a lot of things the US government should fix, social security comes to mind, but without a budget surplus to fix these things, it would mean more debt. How much more debt can the US take on? In terms of debt as a % of GDP Japan and I believe Australia are worse off, but still lets not try to outdue them on this issue.