Simple Taxation, Simple Benefits, and a Balanced Budget

By Bruce Anderson

Pay for a new Universal Social Security with a flat 10% income tax and a 10% VAT. Pay for discretionary spending with a per-capita tax.

Simple taxation has two main parts.

In the first part, we pay taxes to finance income redistribution.

There are many benefit programs. Social Security, Medicaid, Medicare, unemployment benefits, and food stamps are a few. We should combine all entitlement programs into a Universal Social Security program that makes one equal monthly payment to each and every person.

To pay for Universal Social Security, levy a flat 10% tax on all income and replace corporate taxation with a 10% value added tax.

The per-capita payment would be close to the official poverty level. Earning income would cause no loss of any benefit. Taxes and benefits would be automatically balanced. There could be no demographic funding crisis. No exemptions, no deductions, no tax-free income, and no untaxed benefits would make low rates possible.

In the second part, we pay taxes to finance discretionary spending like defense and medical research.

To pay for discretionary spending, levy a per-capita tax with each spending bill. Taxes and spending are automatically balanced.

In summary it is possible to have effectively progressive taxation without the problems of graduated rates. Effective Tax Rates is a spread sheet showing effective income tax rates that vary from large negative percentages for lower incomes to almost 10 percent for larger incomes.