Actually, the new tax structure with a maximum tax rate of 35%, the same as for corporations is attractive, it will prevent artificial incorporation of high earners just to evade taxation. My preference was and is to eliminate completely double taxation in dividends, but do it by making dividend paid deductible to corporations, not recipients , just as interest paid is. To pay for it, raise the corporate tax by 1% to 36% and raise the marginal rate on individuals to the same level (36%). That should be completely "revenue neutral" (it might even bring in an additional $50 B into the treasury, I have not dome the calculation) and eliminate a lot of problems in Corporate America, where excessive debt (relative to equity) is taken on because interest payments are deductible but dividends are not. A company yielding 3% dividends will have no change in its tax burden. Companies that borrow heavily but pay no dividends will have an incentive to pay dividends and increase their equity ratio. The travesty of shifting tax burden to seniors that draw on their pensions will also be eliminated in this fashion.
I think that if a flat tax is implemented, it should include all the payroll taxes, then we can simplify the tax code quite drastically, eliminate all the excessive amounts that go to pay for lawyers and accountants for tax evasion purposes (excuse me, tax optimization). This released funding can then be channeled into better accounting and corporate governance (going back therefore to accountant and lawyers, you don't want to discriminate against these professions either). No deductions, a flat rate of let say 10% up to $ 85,000, another rate of 20% from $85 to $170,000, and a flat rate of 30% from $170,000 and above. All income, all gains (cap gains etc...) be taxed as one form of income. No need to worry about wash sales of equity and no need to keep extensive records either (your broker sends you one statement of your total gain or loss in a given year, and that is it....). I doubt that such a law will pass though.
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