Taxes

At this writing the tax code of the United States, Title 26 of the United States Code, contains nearly four million words. And that’s just the statutory law passed by congress. The regulations set forth in the administrative code that govern the operation of the IRS, Title 26 of the Code of Federal Regulations, are about four times larger, and also have the force of law. This situation is inexcusable. It establishes a tax structure that is quite literally incomprehensible. Very smart people devote their entire careers to understanding small fractions of the tax code and regulations as applied to very narrow situations. Moreover, the law and the rules are full of loopholes and other spaghetti constructs that lead to gross inequities. For example, approximately half of American households pay no income taxes at all. And taxes on the type of income enjoyed by very wealthy people, called capital gains, are far lower as a percentage of their income than the taxes paid by ordinary wage earners. As a result, the middle class is getting squeezed hard in a government tax grab of extortionary proportions. As for corporate taxes, in one absurd example oil companies have enjoyed tax breaks amounting to billions of dollars at the same time they were making record profits. The tax code and regulations need to be overhauled. And not overhauled in a way that mainly benefits corporations and wealthy investors (ludicrously called “job creators”, even if they don’t create any jobs), which has long been the most common legislative approach. The tax structure needs to be redesigned in a way that unburdens the middle class, preferably without inflicting undue burdens on anyone else. Let’s see if we can come up with a plan to do this for ourselves. Politicians clearly won’t.

Loosely speaking, there are two types of income – wage income, and investment income. Wage income is money you earn by your labor, your time and effort, and it’s taxed on a graduated scale. If you don’t earn much money, you don’t pay any taxes at all, and may even receive money as a benefit of the tax system. Those with just enough wage income to pay taxes pay only a little. And the more wage income you earn, the higher your effective tax rate is. So over time if you get pay raises, your taxes will always increase faster than your wages. The theory supposedly is the more you earn, the more you can afford to pay.

But that theory falls apart when you consider how taxes are paid by wealthy investors on their investment income. Investment income, called capital gains, is money you acquire simply because you already have a lot more than you need, so you can park your extra money in an investment that increases in value. This is the type of income enjoyed by virtually all people who are truly wealthy. They have enough money to live on the income they obtain from their investments. They don’t have to spend any of the money already invested. They don’t have to work for any of their income if they don’t want to. They just live on the extra money they make from the money they already have. By the way, in my view this is the best way to define “rich”, not the recently advanced view that couples earning over $250,000 per year in wage income are rich, even though they still have to work to get that income.

Regardless of the amount of capital gains a rich person has, the percentage of their investment income they pay in taxes is very low. Much lower than the percentage of our wage income we commoners pay in taxes. This is true even of the extremely rich whose investment returns are in the millions, or even billions, of dollars per year. Capital gains income is defined as profits from the sale of a capital asset, such as shares of stock. If you don’t sell it, you don’t owe any taxes on it, no matter how much it goes up in value. Say for example you own $1 million worth of a particular stock, and the price of the stock goes through the roof. If you don’t sell any of your stock, you don’t owe any taxes on the increase in its value because you haven’t “realized” any of the increase. This isn’t even a loophole. It’s part of the basic structure of the tax system.

Let’s look at a couple of examples. At this writing the federally mandated minimum wage is at least $7.25 per hour. So a worker earning the federal minimum wage, working 40 hours a week, 50 weeks a year with 2 weeks off, earns $14,500 per year. If that person made $14,500 last year, they would have owed the federal government $1,709 in taxes, or about 12%. That’s a pretty big chunk of change for someone making minimum wage. And it’s exceedingly difficult for someone making minimum wage to sock away any money to invest.

Compare that to an executive who earned $250,000 last year in salary, and also owned stocks that increased in value a million dollars during the year. That executive would pay $65,900 in taxes on their earned income, or about 26%. Obviously the executive pays much more in taxes at a much higher tax rate than the minimum wage worker. That’s an example of “the more you earn the more in taxes you can afford to pay” philosophy that applies to earned income.

But what about the $1 million increase in the value of the stock the executive owns? Unless they sold some of the stock for a profit, no tax is owed on the increase because the gain wasn’t “realized”. They effectively made a million dollars tax free, and can keep that increase invested in the stock, along with the entire original investment, as the stock continues to increase in value. If the investor sold some of the stock for a profit, they would pay some tax on the amount sold. But the tax rate on their profit would be far less than the tax rate on their wages. What if the executive sells some of the investment at a loss? Then their other income is offset by the loss on their investment, which reduces the tax they pay on their wages.

Is the executive “rich”? That depends on how you define rich. The executive still has to work to get the wage income, which presumably takes up most of their time. If they’re keeping the stock for their retirement, it doesn’t really do them any good right now. The executive probably thinks $250,000 is a pretty good salary, but may not regard it as enough to be “rich”. So maybe the executive is rich, maybe they’re not.

Consider another example, of an investor who is indisputably rich. Say the investor has millions of dollars in cash at the beginning

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of the year sitting in a safe, and uses that money to pay bills all year long. The investor doesn’t have to work, doesn’t have a job, and has no “earned” income. So at the end of the year, the investor doesn’t pay any income taxes on earned income because they didn’t have any.

Suppose the investor also owns a ton of stock at the beginning of the year, and at the end of the year the stock has gone up in value a billion dollars. But the investor didn’t sell any of the stock, and doesn’t want to sell any because the stock price is going gangbusters. What’s the investor’s tax liability on the stock increase? Zero. Because the investor didn’t sell any stock, the increase in the stock’s value wasn’t “realized”, so there’s no capital gains income, and they pay ZERO taxes. Even though the investor “made” a billion dollars, they didn’t have any “income” for the purposes of paying income taxes. So, the investor pays nothing in taxes, even though they started the year already rich, and just made another billion dollars! Not only that, but they get to keep their entire investment in the stock. Not a penny goes to the government.

When the cash in the investor’s safe is all spent and they finally sell some of the stock, the increase on the stock that is sold is indeed realized as capital gains income, and a tax must be paid on that increase. But even then, the capital gains income tax rate the investor pays is still much lower than the tax most wage earners pay on their hard-earned income.

So, under our current federal tax structure the rich investor gets to keep their money invested as their stock continues to go up in value without being taxed on the increase. If they sell and make some money on some of the stock, they owe taxes on the increase in value of the amount sold, but their taxes are far less than a wage earner who works their tail off to earn the same amount. That doesn’t seem very fair, does it? The worker has to pay thousands of dollars in taxes, even if they earn minimum wage, while the rich investor either doesn’t have to pay any taxes at all, or pays at a rate lower than the worker’s. Who set up this crazy system? There’s only one possible

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answer—politicians in congress. And there’s no realistic possibility they’ll ever change it. So let’s see if we can come up with a way to make things more fair for ourselves, preferably without causing any undue harm to the well-off executive or to the rich investor.

Suppose we agree that a reasonable, rational tax burden on wage earners is 10% of our wage income, with no exceptions, no loopholes, no deductions. Suppose we also agree to define by law the highest “wage” a person can earn is 100 times as much as a minimum wage worker earns working full time, and suppose the minimum wage was $7.50/hr. The minimum wage worker would make $15,000 per year. So the highest “wage” a person could earn would be capped at 100 times as much, or $1,500,000. A person who earns more than that, such as a corporate CEO who earns $2 million per year for example, would be taxed at a “non-wage” tax rate on earnings above the wage cap, even though that income may not be the same as what’s conventionally recognized as non-wage income.

Suppose we also agree that a reasonable, rational tax burden on wealthy investors whose investments increase in value whether the increase is “realized” or not, would be set annually at a rate sufficient to balance the federal budget every year, up to some maximum percentage of their income. Suppose we impose a graduated tax structure on non-wage income, including both investment income and corporate income. For example, we could make non-wage income up to $100,000 per year non-taxable, so ordinary wage earners can save and invest without increasing our tax burden until we have a sizable income just from our investments.

We can make non-wage income between $100,001 and $1,500,000 taxable at 10%, just like wage income. But the tax rate on non-wage income in excess of $1,500,000 could be set at a rate calculated to balance the federal budget for that year, but no higher than 85% and no lower than the tax rate on wage income, that is, no lower than 10%. Increases in the value of investments would be taxable even if the income wasn’t “realized” during the year. Investors

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holding such investments would have to pay taxes on the increase, even if they have to sell some of the investments to pay their taxes. And if an investment is sold at a loss, the loss can offset other non-wage income, but not wage income. Everybody pays taxes on their wages at the same wage tax rate.

The extremely wealthy would initially despise such a change and would probably do their best to defeat it. But such an overhaul of the tax system has a lot of desirable features from the standpoint of the average worker. It ensures wage earners, all wage earners, pay a reasonable tax and have some skin in the game. That is, we all have a personal stake in how our tax money is spent. It places a proportionally greater tax burden on the very rich who can afford it. And it gives the middle class something to shoot for by allowing us to invest without adding to our tax burden until we have amassed a considerable nest egg. We wouldn’t have to pay any taxes on income from our investments until we make more than $100,000 per year just from the investments. On the other hand, if an investor earns a billion dollars in a year from their investments, they’d have to pay taxes on the increase even if they have to sell some of the investment to do so. But they’d still have an excellent quality of life even if their tax burden on the increase is the maximum 85%. The investor would still have after-tax income of $150,000,000 to enjoy, in addition to the value of the entire original investment, which remains untaxed. Contrast this with the investor’s current tax free increase in stock value if the investor doesn’t sell any of the stock.

Furthermore, such a change to the tax law would provide the very rich with a huge incentive to be supportive of reducing federal expenditures to a rational level and greatly reducing the size of government, because the taxes on their investment income would decrease proportionally down to a minimum of 10%. This tax structure is far better for the overwhelming majority of us commoners, including the entire middle class, than the structure we now have to deal with. And, it doesn’t impose any undue burdens on

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the wealthy. For these reasons alone it’s worthy of serious consideration.

To implement such a “dramagic” (new word) change, we just have to pass a new law. 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 of non-politicians trying 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. We can even increase the minimum wage to a more rational level. We can also reduce the hours in a work week, and increase the 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:

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Overtime must must must must must be paid by the be paid by the be paid by the be paid by the be paid by the be paid by the be paid by the be paid by the employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly employer at an overtime hourly wagewage wage, and shall be , and shall be , and shall be , and shall be , and shall be , and shall be , and shall be measured measured measured in increments in incrementsin increments in increments in incrementsin increments no longer than 15 minutesno longer than 15 minutes no longer than 15 minutes no longer than 15 minutes no longer than 15 minutes no longer than 15 minutesno longer than 15 minutes no longer than 15 minutes no longer than 15 minutesno longer than 15 minutesno longer than 15 minutesno longer than 15 minutes no longer than 15 minutes no longer than 15 minutes . The overtime hourly he overtime hourly he overtime hourly he overtime hourly he overtime hourly he overtime hourly he overtime hourly he overtime hourly wage wage wage wage is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than is defined to be no less than 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage. 1.5 times the regular hourly wage.

Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more timetime in a in a singsing le le week than week than week than week than week than in in a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the a standard work week is entirely at the employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee employee’s discretion. If an employee chooses chooses chooses chooses chooses not not to to to work work more than more than more than more than more than the standard work weekthe standard work week the standard work weekthe standard work weekthe standard work week the standard work weekthe standard work weekthe standard work week the standard work weekthe standard work weekthe standard work week , the choice the choice the choice the choice the choice shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse shall not result in any adverse consequences or consequences or consequences or consequences or consequences or consequences or consequences or action action s by by or for the employer the employer the employer the employer the employer the employer against the against the against the against the against the against the against the against the employee.employee. employee. employee. employee.

Hereby, t Hereby, tHereby, tHereby, tHereby, the maximum number of he maximum number of he maximum number of he maximum number of he maximum number of he maximum number of he maximum number of he maximum number of he maximum number of he maximum number of weeksweeks weeks in a in a in a standard standard standard standard work work year year is defined to be is defined to be is defined to be is defined to be is defined to be is defined to be is defined to be 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an 48 weeks. Time an employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater employee spends working for a single employer greater than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall than the standard number of weeks in a work year shall

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be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. be defined as overtime. Overtime shall beOvertime shall beOvertime shall be Overtime shall beOvertime shall beOvertime shall be Overtime shall beOvertime shall be Overtime shall be Overtime shall be paid by the paid by the paid by the paid by the paid by the paid by the paid by the employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be employer at the overtime hourly wage, and shall be measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes.measured in increments no longer than 15 minutes.measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes.measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes.measured in increments no longer than 15 minutes.measured in increments no longer than 15 minutes. measured in increments no longer than 15 minutes.

Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more Whether an employee works more days days in a single in a single in a single in a single in a single in a single in a single in a single year than in a standard work than in a standard work than in a standard work than in a standard work than in a standard work than in a standard work than in a standard work than in a standard work than in a standard work than in a standard work than in a standard work year is entirely at the is entirely at the is entirely at the is entirely at the is entirely at the is entirely at the is entirely at the is entirely at the is entirely at the is entirely at the employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho employee’s discretion. If an employee cho oses not to oses not to oses not to oses not to oses not to oses not to oses not to oses not to oses not to work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard work more than the standard year year, the choice , the choice , the choice , the choice , the choice , the choice , the choice , the choice shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions shall not result in any adverse consequences or actions by by or for the employer the employer the employer the employer the employer the employer against the employee.against the employee.against the employee. against the employee. against the employee.against the employee.against the employee.against the employee. against the employee. against the employee. against the employee. against the employee.

The maximum wage he maximum wage he maximum wage he maximum wage he maximum wage he maximum wage he maximum wage he maximum wage he maximum wage income income factor is factor is factor is factor is factor is factor is hereby hereby hereby defined to be 100. defined to be 100. defined to be 100. defined to be 100.defined to be 100.

In accordance with the In accordance with the In accordance with the In accordance with the In accordance with the In accordance with the In accordance with the In accordance with the In accordance with the foregoing foregoing foregoing, the standard , the standard , the standard , the standard , the standard , the standard , the standard , the standard annual wage income is annual wage income is annual wage income is annual wage income is annual wage income is annual wage income is annual wage income is annual wage income is $10 .00/hr x 0/hr x 0/hr x 0/hr x 35 hr/wk x hr/wk x hr/wk x 48 wk/yr = $16,800 . The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is The maximum wage income is thus thus thus thus 100 x 100 x 100 x 100 x 100 x 100 x $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. $16,800 = 1,680,000. A person A person A personA person ’s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for s income obtained for his labor his labor his labor his labor in an amount in an amount in an amount in an amount in an amount in an amount in an amount in an amount greater than greater than greater than greater than greater than greater than the maximum wage the maximum wage the maximum wage the maximum wage the maximum wage the maximum wage the maximum wage the maximum wage the maximum wage income is hereby defined is hereby defined is hereby defined is hereby defined is hereby defined is hereby defined is hereby defined is hereby defined is hereby defined to be to be to be to be nonnon -wage income.wage income. wage income. wage income. wage income. wage income.wage income. All All other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and other income, including all investment income and all all corporate income, is corporate income, is corporate income, is corporate income, is corporate income, is corporate income, is corporate income, is corporate income, is corporate income, is hereby hereby defined to be non defined to be non defined to be nondefined to be non defined to be non defined to be nondefined to be non -wage wage wage wage income. income.

Hereby, n Hereby, nHereby, nHereby, nHereby, non -wage income wage income wage income wage income wage income up to a maximum of up to a maximum of up to a maximum of up to a maximum of up to a maximum of up to a maximum of up to a maximum of up to a maximum of up to a maximum of up to a maximum of $100,000 per year per year is defined to be defined to be defined to be defined to be defined to be defined to be no n-taxabletaxable taxable taxable non -wage income.wage income. wage income. wage income.

Hereby, Hereby, Hereby, Hereby, non -wage income greater than $100,00wage income greater than $100,00 wage income greater than $100,00 wage income greater than $100,00 wage income greater than $100,00 wage income greater than $100,00wage income greater than $100,00 wage income greater than $100,00wage income greater than $100,00 wage income greater than $100,00wage income greater than $100,00 wage income greater than $100,00 wage income greater than $100,00wage income greater than $100,00wage income greater than $100,00wage income greater than $100,00wage income greater than $100,00wage income greater than $100,00wage income greater than $100,000 per year per year is defined to be taxable non is defined to be taxable non is defined to be taxable non is defined to be taxable nonis defined to be taxable nonis defined to be taxable nonis defined to be taxable non is defined to be taxable nonis defined to be taxable nonis defined to be taxable non is defined to be taxable non is defined to be taxable non is defined to be taxable non -wage incomewage income wage income wage income wage income wage income . The The The tax due on tax due on tax due on tax due on tax due on tax due on such such such income income income, up to up to up to a non a non -wage income limitwage income limit wage income limit wage income limit wage income limit wage income limit wage income limit wage income limit , is defined defined defined to be to be to be to be a non a non a non-wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the wage income tax rate times the taxable taxable taxable taxable non -wage incomewage income wage income wage income wage income . The nonThe non The non -wage income tax wage income tax wage income tax wage income tax wage income tax wage income tax wage income tax wage income tax wage income tax rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage rate is hereby defined to be the same as wage income tax rate. income tax rate. income tax rate. income tax rate. income tax rate. income tax rate. income tax rate. income tax rate. income tax rate. income tax rate. The The taxable taxable taxable taxable taxable non -wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is wage income limit is hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage hereby defined to be equal the maximum wage income. income.

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Hereby, Hereby, Hereby, Hereby, non -wage wage wage income in excess of income in excess of income in excess of income in excess of income in excess of income in excess of income in excess of income in excess of income in excess of the nonthe non the nonthe non -wage income wage income wage income wage income wage income limit limit limit limit is defined is definedis defined is defined to be excess nonto be excess non to be excess non to be excess non to be excess non to be excess nonto be excess nonto be excess nonto be excess nonto be excess non -wage wage wage income. The income. The income. The income. The income. The tax due on tax due on tax due on tax due on tax due on excess non excess non excess nonexcess nonexcess non excess non-wage income wage income wage income wage income wage income wage income is is determined by a determined by a determined by a determined by adetermined by adetermined by a determined by an excessn excessn excess n excess n excessn excess nonnon -wage income tax ratewage income tax rate wage income tax rate wage income tax rate wage income tax rate wage income tax ratewage income tax ratewage income tax ratewage income tax rate wage income tax ratewage income tax rate wage income tax rate set set set annually as { annually as { annually as { annually as { annually as {the total nonthe total non the total nonthe total nonthe total nonthe total non the total nonthe total non -wage income wage income wage income wage income wage income in excess of in excess of in excess of in excess of in excess of in excess of in excess of in excess of the nonthe non the non the non-wage income limitwage income limit wage income limit wage income limit wage income limit wage income limitwage income limit wage income limit } divided by { } divided by { } divided by {} divided by { } divided by {} divided by { } divided by {all all federal federal expenditures in expenditures in expenditures in expenditures in expenditures in expenditures in expenditures in the the the year year, minus minus the total wathe total wa the total wathe total wathe total wathe total wathe total wa the total wathe total wathe total wage income ge income ge income ge income ge income tax tax tax due for the year for the yearfor the yearfor the year for the year , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts , minus all other federal tax receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts due for the year, minus all other federal receipts of any of any of any of any kindkind for the year for the yearfor the year for the year }; provided t; provided t; provided t ; provided t; provided t ; provided the excess non excess non excess nonexcess nonexcess nonexcess non -wage wage wage income tax rate income tax rateincome tax rate income tax rateincome tax rate income tax rateincome tax rate shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of shall not be higher than a maximum of 85% , and, and shall not be lower than shall not be lower than shall not be lower than shall not be lower than shall not be lower than shall not be lower than shall not be lower than a minimum of 10% a minimum of 10% a minimum of 10%a minimum of 10% a minimum of 10%a minimum of 10% a minimum of 10%a minimum of 10%.

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

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

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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.

As we know, in order to actually pass such a fundamental restructuring, in addition to a majority of at least 218 newly elected Independent representatives, 51 new Independent senators and a new president who won’t veto it must also be swept into office. Or, we can elect a 2/3 supermajority of the house of representatives and a 2/3 supermajority of the senate, sufficient to override a presidential veto. Either scenario will require at least two and possibly three or more biennial election cycles. But this can all be achieved, especially considering the current longstanding widespread extremely low approval rating of Congress, widespread misgivings regarding the president, and the profound disillusionment being experienced across the country due to the ineffective, uninspiring, and untrustworthy

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history of the incumbents and their party candidate potential replacements.