Reconstruction of U.S. Tax Policy Proposal For Consideration

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RECONSTRUCTION OF U.S. TAX POLICY

PROPOSAL FOR CONSIDERATION
For U.S. Congressional Approval
OVERVIEW
We can debate long and hard about the merits of taxation, the benefits of current government funded programs, and
the problems with distributing such funds. Herein, we hope to create a dialog for considering a new tax structure,
which seeks to maximize the total economy of the nation, while providing funding for the programs which are already
established. This proposal will not consider a net increase or decrease in overall taxes collected, unless we see a
need for some additional funding to be undertaken in which to ensure consistent operation within our government as
it stands.
The Objective
Redistribute the tax burden among citizens on a basis of consumption (the consumption tax model)
Reduce, or eliminate, issues caused by income taxation
Reduce corporate level taxation to effectively benefit the economy as a whole
The Opportunity
Maintain the tax base for government projects
By imposing taxes on a consumption model
The Solution
Create a uniform federal consumption tax
Eliminate Income tax at the personal level
Set sales tax rates on a variable basis ties to the GDP
OUR PROPOSAL
All of the following ideas would require a legislative act, and therefore must first be proposed to Congress. Begin by
eliminating all personal income tax on US citizens. This would create a net tax deficit of roughly $3 trillion. To make
up for this, we propose a consumption tax, to be levied in a schedule to be determined by policy-makers. Given that
US business sales data shows that since 2010, recovering from the Great Recession, annual sales have been no
less than $12 trillion, and growing. By levying an across-the-board sales tax, we can tax goods at 25%, effectively
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making up the difference. Of course, paying 25% tax on groceries and clothing would be outrageous, which is why a
scaled by need. Products like groceries, clothing, fuel, etc. would be subject to little or no (additional) tax, while
luxury products would be taxed at a higher rate. Luxury items would include automobiles, tobacco, alcohol,
entertainment & amusement, dining, lodging, travel, furnishings, and essentially anything not required to live. A
consumption tax would also be imposed on the purchase of foreign currencies. This will negate any benefit from
travelling abroad to make purchases, a tool only utilized by those with available money to spend while travelling
internationally. These taxes could be refunded to citizens upon return to the US.
Rationale
Reduce incentives for tax-evasion among wealthy citizens
Relieves tax burden on impoverished citizens
Increases investment US corporations, allowing for greater growth potential
Reduces administrative needs of the government, freeing up tax revenue for investment in social programs
Execution Strategy
This program will require a severe shift in IRS directives, as the personal income tax department of the IRS will
become obsolete. Those working in that department will need to be reassigned and effectively trained to police travel
taxes, as well as foreign exchange tax policies. -Maybe
Caveats & Loopholes
Potential Taxation Schedule by Product Type

This is simply a possible schedule for the taxation of commonly sold product types in the US
Product Type
Proposed
Rate
2015 Total
Sales
Anticipated
Revenue
Food
2%
$6B
$120M
Clothing/Acc/Footwear
2%
$252B
$5.04B
Automobile (used)
8%
$1.2T
$96B
Automotive (new)
20%
$1.02T
$204B
Tobacco (estimate at $5/pack)
35%
$57.5B
$20B
Alcohol
28%
$211B
$710B
Entertainment
30%
$1.32T
$396B
Dining
26%
Airline
40%
$120B
$48B
Sporting Goods
30%
Percent of Current
Tax Structure
EXPECTED RESULTS
All of the following ideas would require a legislative act, and therefore must first be proposed to Congress. Begin by
eliminating all personal income tax on US citizens. This would create a net tax deficit of roughly $3 trillion. To make
up for this, we propose a consumption tax, to be levied in a schedule to be determined by policy-makers. Given that
US business sales data shows that since 2010, recovering from the Great Recession, annual sales have been no
less than $12 trillion, and growing. By levying an across-the-board sales tax, we can tax goods at 25%, effectively
making up the difference. Of course, paying 25% tax on groceries and clothing would be outrageous, which is why a
scaled by need. Products like groceries, clothing, fuel, etc. would be subject to little or no (additional) tax, while
luxury products would be taxed at a higher rate. Luxury items would include automobiles, tobacco, alcohol,
entertainment & amusement, dining, lodging, travel, furnishings, and essentially anything not required to live. A
consumption tax would also be imposed on the purchase of foreign currencies. This will negate any benefit from
travelling abroad to make purchases, a tool only utilized by those with available money to spend while travelling
internationally. These taxes could be refunded to citizens upon return to the US.s requirements to provide the
following results:
Fiscal Benefits
Social Benefits
Other Benefits
COSTS
Additional costs to be considered IRS restructuring ->>???
CONCLUSION
If you have questions on this proposal, feel free to contact Christopher Lindeman at your convenience by email at
cwl21@pitt.edu or by phone at 412-606-6252.
Thank you for your consideration,
Christopher Lindeman

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RECONSTRUCTION OF U.S. TAX POLICY

Caveats & Loopholes

Potential Taxation Schedule by Product Type

Tobacco (estimate at $5/pack)

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