Implementing Changes In The Tax Structure

To implement the previoiusly described changes in our tax structure, we just have to pass a new law. The new law would repeal relevant portions of the existing tax laws and regulations, and replace them with a new tax law we would write ourselves. Presto. New tax structure in place. No muss, no fuss. No letters, no complaining, no demonstrations, no million person march, no grass roots movement. Just straight to business with a newly elected congress comprising non-politicians working to make our own lives better.

Such a law can and should be short and to the point, and easy to understand in its entirety by anyone of average intelligence. In addition to increasing the minimum wage to a more rational level, we can also reduce the hours in a work week, and increase the minimum amount of vacation time we get, to give us more actual freedom to enjoy. Here is a bill that is completely suitable for these purposes:

An Act To Restructure The Internal Revenue Laws Of The United States.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, effective upon the date of passage of this act into law:

A taxpayer is a natural person or legal entity such as a corporation that has income. Income is money or other consideration received from any source in exchange for labor, goods, services, increase in value of real or other property, or the like, less the cost to the taxpayer of providing the labor, goods, services, real or other property, or the like.

Wage income can be earned only by natural persons. The annual federal income tax due on a taxpayer’s wage income is determined by a wage income tax rate multiplied by the wages received in a calendar year. Hereby, the wage income tax rate is set at 10%.

The maximum wage income is defined to be a standard annual wage income multiplied by a maximum wage income factor. The standard annual wage income is hereby defined to be a minimum allowable hourly wage, multiplied by a maximum allowable number of hours in a work week, multiplied by a maximum allowable number or work weeks per year.

Hereby, the minimum allowable hourly wage is defined to be $15.00 per hour. Every employer must pay every employee a regular hourly wage of at least this minimum allowable hourly wage.

Hereby, the maximum number of hours in a standard work day is 7 hours per day, or 35 hours per week. Time an employee spends working for a single employer greater than the number of hours in a standard work day or work week is defined as overtime. Overtime must be paid by the employer at an overtime hourly wage, and shall be measured in increments no longer than 15 minutes. The overtime hourly wage is defined to be no less than 1.5 times the regular hourly wage.

Whether an employee works more time in a single day or week than in a standard work day or work week respectively, is entirely at the employee’s discretion. If an employee chooses not to work more than a standard work day or week respectively, the choice shall not result in any adverse actions or other consequences by the employer against the employee.

Hereby, the minimum vacation time in a standard work year is defined to be 48 weeks. Any vacation time an employee spends working for a single employer shall be defined as overtime. Overtime shall be paid by the employer at the overtime hourly wage, and shall be measured for purposes of pay in increments of 15 minutes or a fraction thereof. As such, the minimum an employee is paid for vacation time not taken shall be no less than 7 hours/day x $15/hour x 1.5 overtime rate = $157.50/day. Further, an employee must take at least 10 workdays (i.e., 2 weeks) of vacation per year, scheduled at the sole discretion of the employee in increments no less than 1/2 day.

The maximum wage income factor is hereby defined to be 50.

In accordance with the foregoing, the standard annual wage income is $15.00/hr x 35hr/wk x 52wk/yr = $27,300. The maximum standard wage income is thus 50 x $25,200 = $1,260,000. Except for vacation time taken, which is paid at the standard hourly wage, a person’s wage income any greater than the standard annual wage income is hereby defined to be non-wage income. All other income, including all investment income and all corporate income, is hereby defined to be non-wage income.

Hereby, non-wage income up to a maximum of $100,000 per year is defined to be non-taxable non-wage income.

Hereby, non-wage income greater than $100,000 per year is defined to be taxable non-wage income. The tax due on such income, up to a non-wage income limit, is defined to be a non-wage income tax rate times the taxable non-wage income. The non-wage income tax rate is hereby defined to be the same as the wage income tax rate. The taxable non-wage income limit is hereby defined to be equal to the maximum wage income.

Hereby, non-wage income in excess of the non-wage income limit is defined to be excess non-wage income. The tax due on excess non-wage income is determined by an excess non-wage income tax rate set annually as {the total non-wage income in excess of the non-wage income limit} divided by {all federal expenditures in the year, minus the total wage income tax due for the year, minus all other federal tax receipts due for the year, minus all other federal receipts of any kind for the year}; provided the excess non-wage income tax rate shall not be higher than a maximum of 85%, and shall not be lower than a minimum of 10%.

Income taxes are to be paid by taxpayers on taxable income received during the year anywhere in the world by U.S. taxpayers, and by foreign taxpayers including corporations and foreign citizens within the borders of the U.S. or its territories

Any pre-existing law, regulation, rule, or order, or the like that is inconsistent with this law, including in particular, but not limited to, Title 26 of the United States Code and Title 26 of the Code of Federal Regulations, is hereby repealed to the extent of the inconsistency.

The foregoing proposed tax bill is less than 900 words. This single restructuring of the federal taxation system would immediately shift the tax burden that is crushing the middle class to the truly independently wealthy, who are far better able to afford it. This structure also acts to balance the federal budget, and provides large corporations and the wealthy with a powerful incentive to help shrink the size and improve the cost efficiency of the federal government. Furthermore, assume it is indeed possible to run an appropriately sized federal government using only the 10% wage tax, plus the 10% tax on non-wage income between $100,000 and the non-wage income limit, plus the minimum 10% tax on excess non-wage income, and other federal tax receipts such as tariffs on imports and the like. When federal expenditures are reduced to that amount, the tax rate on the excess non-wage income would thereafter be maintained at 10%! Thus, because this plan offers a future permanent tax rate of 10% to large corporations and the very wealthy in exchange for an increased tax rate now, this restructuring may even be viewed as desirable for corporations and the very rich. At that future time when the excess investment and corporate income tax rate is reduced to 10%, the United States might be regarded as a safe haven for business and wealth, resulting in an influx of both from elsewhere in the world. Presumably, domestic investment and subsequent job growth would increase on a scale never experienced here before. What could be sweeter?

Can you imagine the entrenched political power structure enacting into law anything remotely as transforming as this? I can’t. But WE can do something about it ourselves! We ordinary, non-partisan, non-professional-politician citizens can introduce into congress a bill containing this very language upon taking office after the next congressional election! Provided, of course, that we stop voting for party politicians, and vote instead for ordinary citizen non-politicians.