Reader proposes federal tax solution
To the Editor:
The best way to help those of us in the middle class is eliminating tax and regulatory uncertainty so business owners no longer feel paralyzed and afraid to grow their companies. Tax reform would be a good start as it would give owners the confidence and incentive to resume hiring.
I propose slightly reducing taxes for the middle class and the majority of job creators. To pay for this, add an extra tax bracket for those earning over $1 million, have employer provided health insurance and corporate dividends tax deductible at the corporate level and taxed as ordinary income to individuals, and tax capital gains as ordinary income with a 25% cap. Mortgage interest and charitable deductions remain.
Currently, the first $17,400 of earned income for those filing married filing jointly is taxed at 10%. The next $54,300 is taxed at 15%; the next $145,750 at 25%; the next $170,900 at 33%; and anything over $388,350 at 35%.
Alternative: Tax the first $25,000 of earned income at 10%; the next $75,000 at 15%; the next $150,000 at 25%; the next $250,000 at 30%; the next $500,000 at 35%; and anything over $1,000,000 at 40%.
According to the IRS, of the 140,494,127 tax returns filed in 2009 (latest year available), 236,883 had adjusted gross income in excess of $1 million. Of those, 84,514 were above $2 million, 22,596 above $5 million; and 8,274 above $10 million. The lifestyle of someone earning $1 million or $10 million is quite different from the rest of us, so this group can afford a tax increase, not those making $250,000 like President Obama proposes. Neither republicans nor democrats will like the plan, so it probably makes sense.
Regarding corporate taxes - reduce them to, at most, 25%. Since businesses pass this expense along to consumers, we would all benefit. And it would incentivize corporations to bring money and jobs back to America.
In addition, our elected officials need to reduce spending and stop over-promising to avoid becoming another Greece. David Ellison