Flat Tax Redesign,
Hmmm....well, how about we figure out based on location what each person needs financially to live. Subtract that amount from the person's income (the ONLY kind of deduction). Then tax everyone at the rate necessary to fund the government's projected expenditures for the coming year, based on the past year's GNP. If taxes need to be cut, it should be based on cutting expenditures, with the exception of true emergency spending (natural and artificial disasters) which will have to be figured into the future rate. That's an initial, off the top of my head, way to do a flat tax. Note, I would have the "Cost of Living" deduction be simply a per person amount, and if people were smart enough to combine living expenses to make their funds go further (communes, marriages, buying blocks, etc.), then good for them. Whether I would use the same adult amount deduction for children or some agebased formula I'm not sure of, and suggestions would be welcome. Also, if you wanted a kinder, gentler society, you could make as part of the government expenditures giving everyone with negative taxes (those whose Cost of Living deduction is greater than their income) enough to bring them up to that Cost of Living amount, then it would be up to them to spend it sensibly. I will address the concept of social safety nets in another post.
I might modify the taxation by dividing government expenditures into two categories, infrastructure and philanthropy. Infrastructure expenditures would be those things that are absolute core duties of the government and must be funded every year. They could be funded as described above in the Flat Tax. The Philanthropy expenditures would be those things that people think might be useful for the government to give aid to and encourage (the arts, sciences, maybe even subsidizing those with income below the cost of living deduction, etc.). There could be a list sent to the taxpayers of all the current programs, those proposed, and how much their projected minimum cost would be for the upcoming year. Then people would be free to voluntarily donate (or not) funds to those programs they like. Any that are insufficiently funded would not be done that year, and the supporters' money could either be refunded, or they could have indicated on their donation form what other programs those funds should be disbursed to should any of their primary choices fail to fund. Before that happens, there could be a general announcement of which programs are short and by how much, and people would then have a short time period in which to make additional donations before those programs are declared dead for that year. BTW, these donations to the additional programs would NOT be deductable from the Infrastructure tax. This way people are only obligated to pay for those things which must be maintained for society to continue to function, but liberals could still have large programs, as long as people are willing to pay for it. Of course, the biggest political fights would then be over what qualifies as Infrastructure and what qualifies as Philanthropy.