January 26, 2012 at 12:55 PM

 Hello Friends: You may not want to consider a comprehensive national  tax proposal from a trial lawyer who never took a course in economics. But I am sitting here feeling inspired by the President's State of the Union Address last night and mulling over what should be done to help shape the whole "fairness/income and wealth disparity issue"  that is on the minds of so many of our people.

The polling data is overwhelming:  Democrats, Republicans, Independents, and even Tea Partiers believe that the wealthiest among us are not paying their fair share of taxes. And the likelihood that Congress will seriously deal with this thorny issue during an election year is quite remote. Still I feel that a comprehensive tax reform package ought to be put forth this year based upon the following terms:

First: I have never been a "soak the rich" Democrat. I have always felt that wealthy  people ought to pay at least, but no more than one third of their income toward income tax. And the operative word here is "pay." That means the complete removal of all tax exemptions, right offs, and tax avoidance gimmicks except for:
(a) The home mortgage interest deduction for the first $650,000 of the valuation of  a primary home.(Current law allows this deduction for second homes as well, which should be eliminated.)
(b) College education costs for families making under $250,000 per year.
(c) Extraordinary medical expenses for families making under $250,000 per year.
(The President is correct when he argues for a 30% alternative minimum tax on persons making over one million dollars a year, but I would apply that idea to folks making over $350,000.)

Second: "Income" should be defined as coming from whatever source derived. No more free lunch for persons who earn their livelihoods from investment. like Mitt Romney. A hedge fund speculator and a brick layer would both be paying taxes according to the same progressive, but simplified tax system. Purge the term "capital gains" from our litany altogether when it comes to income, but preserve it when it comes to the sale or inheritance of a primary family home or farm.

Third: Reduce the regressive payroll tax rate that supports the Social Security and Medicare programs to 3.5% while removing the $106,000 annual cap (and all caps) on income that can be taxed. That would result in a significant tax cut to average American families,  and generate so much additional revenue for these vital programs  that they would be solvent for the next century.

Forth: Reduce the Corporate Tax rate to 25% while eliminating all of the depreciation and other tax avoidance gimmicks that allow highly profitable companies like General Electric to escape paying income taxes at all. The notorious "oil depreciation allowance" is a particular case in point.

Fifth: As a general proposition, avoid using the tax system as an instrument of implementing social policy beyond that which I have suggested, and use it instead as a mechanism for raising necessary revenues for the operation of government.

Sixth: Restore the inheritance tax on very large estates, and put an end to referring to it as the "death tax."

Seventh: Reduce the current  number of tax brackets from 6 to 5. I have a definite opinion about tax rates for each, but will not trouble you with the details of my proposal in this message.

The Republicans have argued that "uncertainty" is keeping the economy from growing. Lets put the ball in their court by introducing a comprehensive American Tax fairness Act of 2012 into this legislative session that establishes some real fairness and certainty in the revenue raising process..

I would welcome all comments and suggestions.

Regards,

DAN RUPLI