How would you adjust these bracket-schedules?

[TeePee4Prez]

Note:  I advocate an elimination of the FICA/Medicare tax completely so I'm advocating a slight increase in the marginal rates for all.

Basically the same ranges as is except for higher marginal rates as follows:

10->12
15->18
25->28
28->32
33->37

Above current 35%:

New 40% bracket: $336,550 to $673,100
New 43% bracket: $673,100 to $1,009,650
New 46% bracket: $1,009,650 to $2,019,300
New 49% bracket: > $2,019,300

AMT:

Eliminate State and Local taxes addback
Include Tax Exempt Interest income over $100,000
Higher exemptoons: $200,000 single, $300,000 HOH, $400,000 MFJ, $150,000 MFS
New rates: 30%: 0-100K AMTI, 35% >100K AMTI

It will now serve it's true purpose with exemption rates adjusted for inflation!

[TeePee4Prez]

And I've only began to scratch the surface.  BTW, I passed the CPA exam!  I could have some fun with the AMT as well.

[TeePee4Prez]

One tax system based on individual income. Eliminate special treatment for marriage.

$0 - $10,000: 5%
$10,000 - $50,000: 15%
$50,000 - $100,000: 25%
$100,000 - $300,000: 35%
$300,000 - $1,000,000: 45%
$1,000,000+: 55%

Plus an annual 1% tax on the value of assets totaling over $10,000,000. Corporate tax is eliminated.

I've toyed with the idea of "intangible personal property" taxes and excess retained earnings taxes on corporations with dividends and capital gains taxed as ordinary income.

[TeePee4Prez]

I'd put it at 30% flat, no deduction, no exemptions....then, once Americans understand how much the federal government is spending, they'll gather their pitchforks and light their torches and march on Wash DC and lynch all the Socialists.

...problem solved

Nice and simple right?  HAHAHAHAHAHAHA!  My pitchforks would be directed at the people who came up with a 30% flat tax!

[TeePee4Prez]

Personal exemption phased out over 50K??  Dude, even I'm not that liberal.

One should note that raising taxes to confiscatory levels is not good for ANYONE!  I'm seeing some of the most extreme proposals being discussed here.  My opinion is to have a pro-growth, yet progressive base broadening tax code.  Payroll/SE tax elimination is a good first step.  I might even favor replacing it with a national GST of say 3-5% like Canada has to pay for health care reform.

[TeePee4Prez]

No clue what I'm talking about?  Try again, I passed the CPA exam and I'm FAR better at taxes than I am at audit.

And the "personal exemption" is $3,700 for 2011, not $10,000 as you said.  There's also a Standard Deduction or Itemized Deduction you can take, whichever is more advantageous to arrive at taxable income.  And current tax law phases exemptions and itemized deductions out over a certain amount.  Just MUCH higher than $50,000 for both phaseouts.  I understand the reason for such deductions and phaseouts.

As for the SE, I was once an IRS Auditor.  I've seen the negative effects of the SE tax on small businesses trying to make it, yet larger business have more tools at their disposal to reduce it.  I know very well how screwed up out current tax laws are.  Some need to be fixed.  Some are fine as they are.

I also forgot.  Poorer taxpayers also have EITC.  I've prepared returns where the amount of EITC was more than half what they made.  I'm not saying it's a bad thing.. well at least in part because it encourages having kids and not being able to fully take care of them.  Our tax code is best for 2 people- the wealthy and the poor, especially those who have kids.  Working people in the middle get stiffed, especially small business owners.  I could go on forever.. Child tax credit?  Yep, I even have issues with that...  For another day.

[TeePee4Prez]

Get rid of the entire tax code and replace income taxes with:

$0-$20,000:  0%
$20,001-40,000:  10%
$40,001-60,000:  20%
$60,001-100,000:  30%
$100,001-250,000:  40%
$250,001-$999,999:  50%
$1,000,000-$9,999,999: 60%
$10,000,000-19,999,999:  75%
$20,000,000+:                   90%

Adjust for inflation, of course.  All charitable giving is tax free with no maximum amount... in order to encourage the riches to DONATE DONATE DONATE!  At least the rich can then choose where the money they control goes instead of just paying it in taxes.

I'd also give those with income under $20,000 a 10% EITC on the first $10,000 and 5% on the second $10,000

So you make $19,999=AWESOME! but $20,001, yer SOL!  Ilike your EITC proposal in part, but I'd work on a phaseout over 20K up to say 40K.

[TeePee4Prez]

No clue what I'm talking about?  Try again, I passed the CPA exam and I'm FAR better at taxes than I am at audit.

And the "personal exemption" is $3,700 for 2011, not $10,000 as you said.  There's also a Standard Deduction or Itemized Deduction you can take, whichever is more advantageous to arrive at taxable income.  And current tax law phases exemptions and itemized deductions out over a certain amount.  Just MUCH higher than $50,000 for both phaseouts.  I understand the reason for such deductions and phaseouts.

I was quoting my plan, not the current reality (although I did say that $10,000 approximates the personal exemption plus the standard deduction, which it does--since I'm eliminating the standard deduction, the personal exemption is essentially absorbing it). And the current law does not phase out the personal exemption completely, nor does it phase out the standard or itemized deductions at all--you really have no clue what you're talking about, which makes your claims to have been an IRS auditor terrifying.

There is a cap to the amount of itemized deductions you can claim, but it's as a percentage of total income, so it rises as your income rises and thus never phases out the itemized deduction. Plus, the cap is not exactly ungenerous--if you have enough of your income in itemized deductions that you reach the cap, you donated a TON to charity (since that's the only itemized deduction that it's really possible to get very large).

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Poor taxpayers do not have the EITC. The EITC is phased in before it is phased out, such that the poorest taxpayers get little or no benefit from the EITC. Those who benefit most from the EITC are somewhat poor but not destitute.

I stand corrected.  Prior to 2010, I'd be right though.  I was thinking the 3% over a certain AGI phaseout.  Whoops.

I would re-institute limitations on itemized deductions based on AGI however.  No need for the insults.

[TeePee4Prez]

Wonkish going back to your ideas-

Not a fan of your brackets.  Of course mine would be more progressive as stated earlier.  I've never been a fan of MSAs by the way.  In fact since their implementation, health care costs have skyrocketed, especially out of pocket costs.  My proposal was to eliminate all regressive payroll taxes altogether.  I still like the Charitable deduction limits of 50%/30%/20% as is.  No limitless.  I like your pension "rollup" plan except that there should be income and amount limitations.  I also think capital gains should be ordinary income on assets held less than a year but reduced, depending on bracket on for long term.

More comments to come on AMT.  Stay tuned.....

[TeePee4Prez]

With Sec. 1031 (LKEs), I agree.  Ban them.  By the way, the CPA exam goes to town on them.  Taxable income should be "realized" gain regardless of whether it was a "like-kind" asset exchange or not.

I actually think your NIT plan  maybe better than EITC.  Again, it is an area that is greatly abused.  There are people that create fake Schedule Cs just to claim the EIC.  There are people who also purposely understate income to get it as well.  The internal controls with it need to be greatly improved.

The gift tax is funny.  I agree with it in part.  I disagree with it as well.  I agree with it because a lot of income taxes can be avoided by giving gifts tax free.  OTOH, it's generally on income already taxed.  I would be open to a much higher exemption for gift taxes, say $25,000 as opposed to $13,000 and an estate tax exemption of about $5 million.

As for the estate tax, I agree with a step down in basis for all assets.  Should be valued at original cost.  But would the capital gain only be assessed on the asset itself on an individual's income rather than included in the taxable estate?  Most estates, say in the high 90s percentage wise never see the "death" or estate tax anyway.  The accounting would be very hairy on that aspect.

I like itemized deductions as is for the most part.  In fact with the higher rates I've proposed, I'd be open to even adding non-mortgage interest paid on all indebtedness up to $100,000 as a deduction.  Even work related expenses and medical expenses, I'd eliminate the AGI floors for them except for AMT purposes.

[TeePee4Prez]

Hmm... not agreeing with the step down or getting rid of the estate tax.  IMO, gains to heirs should have basis at date of death.  I'd get rid of the 6 month alternative valuation date.

With individual itemized deductions, yes there should be some offsets to income.  Not everything on an itemized deduction is for a perverse purpose.  Again, I've harped on smaller businesses needing some of these deductions larger businesses are afforded.  There is a lot of room for fraud with them, but determining taxable income should have some expenses as deductible.