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A progressive-conservative tax policy

A sizable majority (about 35%) the American public has recently consistently demanded progressive economic policies, in spite of its consistent failures witnessed in recent modern history. The growth of this impetus may be attributed to willful misrepresentation, revisionist campaigns and propaganda by the mainstream media and through public K-12 education, both of which are heavily influenced, if not controlled, by the progressive cultural elites.

Simultaneously, America has also witnessed the growth of a vibrant, ideologically-driven libertarian and populist movement that seeks to contain federal government overreach as a Constitutional imperative and as sound fiscal policy.

While conservatives and libertarians are passionate about the project to change culture at large, and, rightly so, pragmatism demands that we express the nuanced and conflicting will of the people in workable policy.

A simple suggestion that combines ideas from both ends of the political spectrum goes like this : simplify the code and reduce the rates (at least, for lower and middle income). Here is my attempt at achieving this, at the federal level.
  • remove all special credits, tax breaks, exemptions & deductions (standard or itemized), AMT, subsidies, non-profit special status etc.
  • eliminate estate taxes, gift taxes, etc.
  • combine all income taxes (wage + short-term + long-term capital + gifts + inheritance)
  • treat non-profits, estates, trusts & corporations as persons for the purposes of taxation (tangential thought: also, for political activity & free speech?)
  • Income tax percentage computed as percentage of gross liquid income, where income includes wages, gifts and all realized capital gains
    • Two alternatives for personal income tax percentage functions (up to a maximum of 99%): 
      • log(x)^e^(-e)*log(x)^2*log(x^e^(-1))/(log(e^e)*log(e^(e^e)))
      • e^(-e)*log(x)*log(x^e)^2*log(x^e^(-1))/(log(e^e)^3*log(e^(e^e)))
    • Corporate / Estate / Trust / Non-profit Income Tax: e^(-e)*log(x)^3/(log(e^e)*log(e^(e^e)))
    • with one exemption -- the poverty exemption -- no income tax levied for income below PPP poverty line
The graphs below plot these functions ('red' for the corporate/estate/trust tax, and 'grey' and 'blue' corresponding to the first and second suggestions, respectively, for personal income tax.) The first picture plots for incomes up to 5 Million USD, while the second one plots for incomes up to 50 Billion USD. (Note that the graphs do not show the effect of (a) maximum percentage of 99, or (b) the poverty line exemption.)




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