Mr. Johnston, the Left’s plan is as flawed as those you critiqued. Why cannot you see this?

It makes no sense that the US tax code ties short term capital gains to an individual’s marginal income tax rate (generally 28%). Prior to the Reagan tax changes top marginal rates could be has high as 70% – which provided a huge difference between short term and long term capital gains taxes. Today’s rates are so close (28 vs. 15) that there is no incentive for holding investments long term – and thus you have a trader’s market, not an investor’s market.

Also since the Reagan tax changes, derivatives have grown exponentially throughout our financial markets. Why? Because of the extremely low tax rates on futures and index options coupled with the deduction for margin interest (leverage). IN short the US tax code is geared to benefit the speculator, and doesn’t reward the long term investor.

Finally, the real estate bubble has a lot to do with the 1031 exchange which allows investment real estate gains to be 100% deferred indefinitely if the proceeds are piled back into another piece of real estate. There is no economic rationale to give real estate such a favored tax preference and distorts the whole US economy.

Occupy Wall Street should be chanting: 80% Tax Rate on Short Term Gains!! That will get the US back to investing in its people, rather than speculating…

What would you propose, Mr. Johnston? ALL income should be taxed at a flat rate. NO income should be taxed twice. I’m middle class and am not enamored of the 999 plan as it basically amounts to a VAT. I feel a VAT, on top of our income tax, is pretty much a foregone conclusion unless a flat tax system is adopted.

Auditors don’t keep the ‘rich’ from protecting their wealth as the Laffer curve dictates. All the auditors, the SEC, etc. didn’t catch Madoff until he’d bilked thousands out of Billion$. Elimination of the current tax code and abolishment of the IRS have to be the first step to a real solution.

TARP, stimulus and most likely stimulus 2: all passed by Democrats and the Occupy Wall Streeters demand Barry’O be handed another term?!. Until taxes are simple enough that everybody can understand them, we’ll all continue to be the rubes chanting class warfare/envy that the likes of Obama and Boehner dream of.

James Bowery has suggested a net asset tax with a floating rate tied to 3 month Treasuries rate, 0.02% currently. However as economy improves, the CBO expects 3 mo T-bill rate to rise to 5.0% by 2016 (and stay there). Let’s see, 10% owns 2/3rds of $60T in household wealth. With a $40T tax base, a net asset tax of .02% raises $8 billion, less than is collect now by alcohol taxes, while a NAT rate of 5% would raise $2.0 trillion, slightly more than is presently raised by income tax and FICA combined. Now THAT’S a counter-cyclical fiscal policy! Here’s the sneaky part of Bowery’s idea, the tax rate would never get to 5.0% (Tsy would still get the money), since there’d be an awful lot of wealthy people with an incentive to step into the 3 month T-bill auction every Monday to “bid down” their own tax rate.
http://majorityrights.com/index.php/webl og/comments/doing_the_basic_math_for_net _asset_tax_as_proposed_by_bowery_in_1992  /

http://www.slyman.org/blog/2011/07/reaga nomics-and-prudent-taxation/