My "Tithe Plus Two" Tax Plan

Why does our nation's president propose a tax plan? That makes no sense to me. It's not in the Constitution.

As Frank J. Fleming has pointed out, no one has the experience ready to be the president. Especially now, when military issues are so crucial, why are we asking our next Commander In Chief to also be our chief economist?

Anyway, even though I know very little about economics I at least know that the economy does not grow from the bottom up. So I should get to write a tax plan too.

I do like Obama's idea of using taxes to distribute welfare. Since we already have "tax credits" as well as tax deductions, and since I am a fan of small government, I would get rid of traditional welfare and only use taxes to handle economic help to the financially needy. (I also would have an overall lower Feredal income tax to move many government functions to the State level where they belong.)

Anyway, here is my plan, which I call the

Tithe Plus Two Tax Plan

Individuals pay 10% of their income, modified by picking two "options". Corporations pay 10% of their positive change in net worth multiplied by the percent of their sales within the U.S., modified by picking two "options".

That's the basics. All the options start with a simple "I statement" and then might be very simple or involve pages of forms. No options can be used twice.

The first two options are identical. Both read:

I want cash back. The government writes me a check for $1,000.

If an individual uses this then his or her tax rate if effectively 10% of their income in excess of $20,000, or tax credit if the individual earns less than $20,000.

All other options must be compared to this baseline: they are sensible when they help someone by more than $1,000. This helps other options to have a clear government purpose.

For example, here is an option to promote saving:

I want to sell investments. My capital gains tax rate will be 8%, not 10%.

This would encourage people to hold onto their investments until they have accumulated $50,000 or more of capital gains (so the 2% is worth more than $1,000).

This option would encourage charity among the wealthy, a tradition that used to be well-entrenched in America but has too much disappeared:

I want to use my wage income charitably. For the past ten years my charitable giving has exceeding my income tax each year. This year my capital gains tax rate on wages will be 8%, not 10%.

This option, like most, would use an attached form similar to the current "Schedules" to defend the ability to use the option and do the resultant tax calculations.

Here is an option to help those with very low income buy food:

I want help with groceries. My income is in the lowest quintile and this year the government will provide me with food stamps.

I will leave it to the experts about how to make the food stamps work. Obviously factors such as family size and regional price of living are important. Other options might help with paying rent, paying medical bills, or other flavors of welfare.

How about saving for college?

I want to see the fruit of saving for college. One or more immediate family members are paying tuition/fees to earn a college degree of a category (professional certification or associate, four-year, or graduate degree) they do not yet have. I will be exempt from capital gains tax on my share of these tuition/fees.

I've never learned about why farmers are taxed differently or how farm subsidies work. Yet it would be easy enough to have an option for farmers.

Why are tips taxed? That makes no sense to me. Another option would not tax tips, which could help someone who earns more than $10,000 of tips each year.

How about this one?

I want the government to honor my ancestors' hard work. My household's net worth is less than the national median income and this year I will be exempt from income tax on inheritance.

Or even more controversial social engineering?

I want help balancing working and parenting. I have a graduate degree and this year I had a child that was more than my second child. This year my income tax rate will be 2%, not 10%.

You can see that the options can be as create and as intricate as desired. The overall plan is simple enough for Congress and voters to understand.

Politicians would undoubtedly try to create special options that favor certain interest groups in ways that make no sense as government policy. But such efforts would be much more transparent.

Notice that corporations would need to avoid having a large increase in net worth due to property appreciation, to avoid having high taxes but low liquid assets. This would affect very few small or medium businesses.

UPDATE: Edited for clarity and to add more examples.