Rewrite the tax code!

By Hal Canary, 2008-05-30 07:18:21 (link)

Rules of the game:

You can change anything you want about the federal tax code, but your changes must be revenue-neutral. No starve-the-beast proposals.

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My suggestion.

--> Let A be the annual income a full-time (40-hour/week) minimum-wage worker would make.

--> Let B be the annual income of the median worker. (50% of Americans make less than him, 50% more.)

--> Let C be the income of the 67-percentile worker. (66.7% of Americans make less than him, 33.3% more.)

Replace current federal taxes with the following:

1) Increase the EITC (earned income tax credit) to a very large level. Make it 0 at zero income, maximum at A, and get down to 0 again at B.

2) Income tax of 50% on all income greater than C, minus philanthropic donations.

3) A huge tax on carbon emissions. On the order of $10 per gallon of gasoline, with an carbon-equivalent tax on coal, diesel, natural gas, etc.

4) A general policy that negative externalities are taxed equal to the indirect cost to society. Carbon emissions are the biggest part of this at the moment, but I like the idea of pollution taxes greater than the cost of totally cleaning up the pollution. And a big tax on non-reusable goods.

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UPDATE: Hey, there's a website for revenue-neutral carbon taxes!