The US federal tax system is terrible. It is inefficient, complicated and unfair.
How about we replace it all with something simple and fair, like this:
Impose a national luxury tax on all goods and services that cost more than $100. Define "luxury" as "costs more than the median sales price of similar goods or services," and calculate the tax based on the difference in the sales price and that median price.
For example, according to Google the median new car price in the US is $37,876. Let say the national luxury tax was 20% and you buy a new car that cost $35,000. You'd owe nothing.
Your rich cousin Betty buys a loaded Range Rover for $137,876? she'd owe $20,000 in luxury taxes (twenty percent of $100,000).
Want to avoid paying taxes? Easy, don't spend your money on expensive stuff. Drive a reliable car, don't spend money on fancy jewelry or 80-year-old scotch or extravagant vacations.
Taxing higher-than-normal spending seems to me to be the least offensive form of taxation. We would be encouraging people to live more frugally, and discouraging them from playing expensive, wasteful status-seeking games. I'm not naive-- rich people would still buy vacation houses and million-dollar supercars to show off their wealth, and plenty of middle-class people would occasionally buy their spouses a fancy diamond necklace for Christmas. They'd just have to pay extra.
Businesses would have to calculate and collect the tax, but that shouldn't be terribly difficult. State sales taxes already require that businesses figure out if what they are selling is taxable or not; asking them to report on what they're selling, for how much (to establish the list of median prices and make sure they're collecting the right amount of tax) isn't much of a stretch. And we already have extensive lists of product categories that are used to assess tariffs when products are imported.
It seems to me both people on the left and people on the right might go for this kind of tax. Lefties should like that it is progressive-- poor people don't buy fancy stuff, so they should end up paying no taxes. Righties should like that it is simple and transparent; the amount you pay will be right there in plain sight when you buy something. No sneaky payroll tax deductions, filling out forms on April 15th or huge IRS bureaucracy interpreting thousands of pages of tax law.
Maybe handle death taxes the same way; if you leave more than the median inheritance to your children, tax the amount over the median. Yes, I know that could be double taxation (the kids might pay again if they spend the money on expensive crap), but it seems fair to me. I'm not a fan of spoiled rich kids who never have to work because their great-grandfather was a brilliant businessman.
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