A Penny Earned Should Be A Penny Taxed
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By Ira Seidman — part seven of twelve in the series decentralize
A few years ago President Obama tried to get rid of the penny, but maybe the priority should have been getting rid of the tax code. The code has gone off the rails to the point where hundreds of cities around the country were bidding on tax cuts for the richest company in history — a company that already does not pay taxes. Of course there is a strong argument to be made that the amount of money Amazon would have brought to Long Island City and New York would have been far greater than the tax cuts, but there are two even stronger points to be made — one we don’t believe in special treatment and two the tax code is not a game of hide and seek for the rich.
Right now we need accountants to help us get through tax season without losing a significant portion of our income. Even people with relatively simple W2s will look to online platforms for help. This should not be rocket science, this should be paying taxes — it should be no different than paying tax on food at the grocery store. Paying taxes is burdensome enough, there do not need to be exceptions for real estate, different codes for capital gains, and inheritance laws that read like an accounting textbook. All we need to do is create one progressive tax code and apply it to personal income and investments alike with additional consumption taxes on carbon (and other pollution), your preferred vices (marijuana, booze, cigarettes, etc…), and luxury goods. Corporate and small business profits should be treated very similarly if not identically and we need to cut real estate taxes to boost supply.
Wealthy people can easily hide money abroad or in investments that compound in such a way that by the time the tax man comes around there’s little to collect. It’s too easy to hide because there are too many exceptions in the code — charities, foundations, foreign investments, etc… I do not pretend to understand it all, but it’s not worth my time to learn about because I can already see the effects which are unchecked wealth inequality, a federal government that has run a deficit for over 20 years, and most importantly a currency that is in the early stages of hyperinflation. This is not a game, this is the way we fund our government so let’s update the code accordingly.
The first thing I would do for the New York City tax code as mayor (if I could), is scrap it. I’d scrap the state and federal codes too if you let me. There’s nothing worth saving, and everything that is decent we can reconstruct with one page — below is my proposal for a city tax code (at exact rates that I’m happy to discuss); I would push for state and federal codes that have a very similar structure but with different rates:
All personal income and investment profits will be taxed together in brackets as follows:
$0-$20,000 — 3.0%
$20,000-$40,000 — 3.2%
$40,000-$80,000 — 3.4%
$80,000-$250,000 — 3.6%
$250,000-$1,000,000 — 3.8%
$1,000,000-$1,000,000,000 — 4.0%
$1,000,000,000+ — 4.2%All consumption will be taxed for cleanup and real cost as follows:
One ton of carbon dioxide emissions — $100 (or best bid)
One ton of air pollution — $100 (or best bid)
One ton of water pollution — $100 (or best bid)
Sin taxes — as they currently are
Luxury goods over $500,000 — 30%
There’s more nuance to the city’s corporate and real estate tax structures than I am knowledgeable enough to comment on; I would defer to not just the experts in my cabinet but also through my proposal for online voting called Athena to crowdsource the best ideas on streamlining these parts of the code. The guiding principle should be the same though — let’s make the code so simple that everyone knows exactly how much they are expected to contribute before they earn their first dollar of the year. Let’s get rid of the loopholes and stop using tax credits to coerce behavior we want to see and move towards just taxing for real cost; real cost that gets spent to clean up the messes we make, public health and environmental messes for starters. Now more than ever New York needs a tax code without red tape to bring back the jobs lost during the pandemic and spur affordable housing development that has not existed in decades.
I hope it’s clear that everyone’s personal city taxes would be going down under my proposal except for millionaires and billionaires who would pay within .35% of what they are currently being asked to pay. This comes in the context of a larger review of how our money is being spent — before we raise anyone’s taxes it is of utmost importance to make sure the government is not wasting the resources it already has. This is essential for public trust and upholding the government’s side of the social contract.
This should be our tax code. Despite my angst to bin the code as it stands on day one, it won’t happen overnight. However, every year we should incrementally move towards a simpler code so as to tax more fairly and effectively, but moving responsibly and sustainably all the while. Long gone will be the days where the first $90,000 earned are taxed differently, but the $90,000 after that is all taxed the same, and the $90,000 after that, and the $90,000 after that… Long gone will be the days of hiding profits in so many other profits that taxes never get collected. But most importantly, long gone will be the days where the extent to which we paid our fair share was tied to who our accountant was. Changes like these are possible, but only once we root out corruption in government. I’m proposing adding referendums as a further check on our democratic process to decentralize power and mitigate corruption, what are the other candidates proposing?
