Proposal 2 F. Nick Michaels 07.04.02-St. Louis, MO

I present the following proposal:

A tax should be levied such that all individuals whose annual net income exceeds $5,000,000.00 shall submit that amount in excess of $5,000,000.00 as payment of income tax in addition to any other taxes paid. Such revenues that the government may collect from this tax will be used not to expand the current budget, but rather to increase the government’s funds and allow for lower taxes for all individuals whose income shall not exceed $5,000,000.00.

The following shall be exempt from the aforementioned tax:

a) any charitable donations exempted from current income taxes.
b) any income derived from investments, including but not limited to returns from stocks and mutual funds and income from bank accounts and other sources.
c) any medical expenditures, including but not limited to doctor and hospital visits, prescription medication, medical equipment, and treatments.
d) any other incomes exempt under current tax law.

In effect, an infinite number of new tax brackets will be created for those whose net income exceeds $5,000,000.00 annually. I have chosen to word this proposal as I have above to avoid calculating the proper percentage necessary for each gross income to be reduced by taxes to a net of $5,000,000.00.

This tax will be beneficial to employees, employers, stockholders, and consumers. The tax allows the individual to retain all net income not exceeding $5,000,000.00, a sum large enough to support even a very lavish lifestyle. Only a very small percentage of wealthy individuals would be affected by this tax. Those individuals would have to accept salaries netting $5,000,000.00 or less annually, or share their wealth. Sharing their wealth would consist of either charitable donations or government collection, allowing the individuals to choose their own benevolent cause or to pass that responsibility to the government. Since many of us have little faith that the government would spend this revenue in a benevolent fashion, the use of this revenue is written into the proposal. Thus, any individual earning more than $5,000,000.00 net annually would have the choice to either pick a cause to help or default to the cause of redistributing the burden of income taxes. Alternatively, individuals currently earning

such large salaries could choose to accept lower salaries. Millionaires such as movie stars and athletes could decide to settle for less money and the movie and sports industries would be able to pass on the savings to fans and consumers. If those multi-billion dollar industries did not feel like passing on the savings, they would be able to invest more in their movies or sports arena to improve the quality of their product as an alternative to lowering the price.

By allowing individuals to keep up to $5,000,000.00, motivation to be the best at one’s profession will not be stifled. If the cap were lower, highly paid individuals such as doctors may not be as motivated to strive for excellence. Money, the pursuit of which as a motivating factor is ideal in a capitalist economy, would therefore continue to stimulate professionals to be the best at their profession as possible. The proposal would also encourage investment, by exempting incomes derived from such activities. This would presumably put more money into the companies, especially from highly paid CEO’s, and companies would again be able to pass savings on to consumers, keeping an increased profit for themselves along the way.

This is an admittedly communistic proposal. This tax would benefit a large number of proletariat and perhaps a large number of corporations as well. The only losers in this scheme are the fabulously wealthy; and, incidentally, they would remain fabulously wealthy anyway. Five million dollars is a sum large enough to ensure the perpetuation of money as motivation for excellence, but small enough to erase some of the greed that has caused companies like Enron and WorldCom to falsify accounting records. The imposition of this tax would relieve the tax burden of individuals with smaller incomes, and redistribute wealthy in a secondary rather than primary manner. In other words, rather than taking from the rich and giving to the poor, this proposal suggests that the government take from the rich to pay the bills of the poor. Thus, the rich are encouraged to be charitable with their money, and loopholes (such as profitable investments) still allow for the increase of wealth above $5,000,000.00 per year.