Income Disparity Tax

We all know the tax code is designed for the wealthy to get richer and keep accountants employed.  How many of you are willing to give up your deductions?  What if you would end up paying fewer taxes in the long run?

  1. Don’t tax labor or income.  These are things we want to promote!
  2. Don’t give deductions for being rich
    • No writing off your mortgage interest.  The poor can’t afford a mortgage, the middle class votes on this, and the rich with 30 houses benefit the most.
  3. No sales taxes.  Again, we want to promote sales.
  4. Tax resource consumption and environmental pollutions.
    • These go to the state whos resources you use or the state who’s land and air you pollute – each state is free to charge whatever they see fit.
  5. Tariffs!  Down with NAFTA and the TPP
    • These go to the federal government, applied to international trade only.  States may not charge import fees on products from another state.
    • Tariff amounts are based on the exporting country’s use of natural resources – the more they pollute, the higher the tariff.  This includes the natural resources of that country used in the making of the product, and any amounts added for unfair treatment of workers, etc.
  6. Tax income disparity

This last one bears some explanation.  What I propose is that we tax income as a ratio of your salary over the lowest paid employee’s salary (within your company).   The principle is that the people working for you enable you to make your salary.  You can’t do it without them, and larger corporations with the largest disparity of incomes tend to have a lot of power – so much so that we no longer have a democracy, but thats another one of the 42 things.  All forms of income count, including benefits, bonuses, stock options, etc.

Here’s how this works:  TaxPercentage = log (YourSalary / LowestSalary) * 25
Example:  If you make 65K/yr and the boss makes 650K/yr and the janitor makes 20K/yr, then the janitor pays no taxes (his salary is the lowest and the log of 1 is 0), you pay 12.8% taxes (down from about 19%), and the boss pays 37.8% (up from about 32%).   Raise janitor’s salary to 40K and the boss will now only pay 30.2% (another 50K/yr in his pocket).  Or he could lower his own salary and instead let the company show a profit for the shareholders, etc.

So, the following people pay no income taxes:

  • A sole proprietor who’s income is based solely on their own knowledge and labor.
  • Any partners in an equal partnership who do not employ any lower-paid employees that are not equally paid partners.
  • The lowest paid employees at any company.

This encourages over-paid CEOs to raise the lowest paid employees salary in order to lower their own taxes.   In some cases, companies will simply get rid of lower-wage jobs and contract these out to other firms.  This puts more power at the hands of labor firms to negotiate things like benefits packages and such for their workers.  Tariffs will need to be high to keep businesses in the US instead of utilizing foreign labor (often in ways that are exploitive).

Of course, there has to be some rules put in place to stop everyone from being employed as independent contractors to get around the law.  In this case, the company is treating people as a resource to be used and thrown away, and so we should use natural resource laws for this.  Contract jobs consider labor as a natural resource and tax the company (not the contractor) appropriately, as per the state’s natural resource taxes (depending on the the state where the contractor resides).   If the contractor is overseas, then federal tariffs apply.  As far as what taxes the consultant pays, that would be determined by the consulting firm.  If the consultant is solo, then he pays no taxes since he’s the lowest paid employee.

Comments welcome!

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