Dear [Representative or Senator],
In following the debate on tax cuts, it seems that one side is working for a
smaller "number," and the focus on the (fraudulently calculated) number is taking
away from the big picture.
The best way to use tax law to improve the economy is simplification and
fairness. That means tax all income the same! (The definition of "taxable income"
will still be a subject for debate.) Let's use the debate about taxes to
focus on that idea!
I suggest that we fight hard to eliminate the double taxation of corporate
income, but offset that "revenue loss" for those worried about the "number"
by taxing all corporate income the same:
- Eliminate tax brackets for corporate income tax; i.e., all income is taxed
at one rate -- the current top bracket rate of 35%. (Yes, this
proposal does get rid of the silly 39% bracket and 38% bracket embedded in the
rate schedule to eliminate the effect of the lower brackets in some
cases.)
- Eliminate the Chapter S filing status invented to avoid double taxation in
certain circumstances (since double taxation will no longer exist).
- Eliminate personal service corporations since the provision for standard
corporations would be very similar under this proposal.
- Eliminate rules allowing (or requiring) consolidation of multiple
companies on one return. These rules were invented to reduce abuse of lower
tax brackets, which would no longer exist under this proposal. This would
increase revenue by disallowing the offset of one corporation's income with a loss from a money-losing corporation.
These proposals also have the advantage of greatly simplifying the
corporate portion of the tax code. I would also suggest the
following changes to the definition of "taxable income" (in order to simplify
taxation, and to further offset the loss of revenue from eliminating the taxation of dividends):
- Eliminate tax loss carry-back, but make tax loss carry-forward go on until
it is offset by profit.
- Eliminate deductions for meals and entertainment (the ones that are
currently only partially deductible).
- Eliminate the deductions for state and local taxes (for all entities, not
just corporations). I see no reason why the federal government should treat
income differently based upon the residence of the person or entity earning
the income.
These suggestions are taken from the ComingTogether Plan (see
www.ComingTogether.info), or are consistent
with that plan. I would appreciate it if you would look at that plan to see the
larger context from which these ideas are taken.
Thank you for your service representing our [District, State].
God bless you,
[Name]