Figuring out taxes

Re “Flatter, simpler, better,” editorial, Nov. 20

The tax code should be flatter, simpler and better. It should also be fair.

A waitress, filing as single and earning $7.50 per hour in 2006, working 40 hours a week for 52 weeks, will have an income of $15,600 on which she will be required to pay $749 in federal income tax, $967 in Social Security tax, $226 in Medicare tax, $36 in California income tax and $125 in state disability tax for a total of $2,103 plus whatever taxes are due on her tips. Meanwhile, a California billionaire who purchases $1 billion worth of California municipal bonds will receive a tax-exempt income of approximately $50 million a year, nearly $1 million a week, for up to 30 years, on which he will be required to pay no federal or state taxes. If the waitress is required to pay taxes on her income, shouldn’t the billionaire be required to pay taxes on his?

NEWELL S. GRAGG

Ventura

The writer is an enrolled agent, a federally authorized tax practitioner.

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What we need is tax code replacement, not another reform that is doomed to repeat the experience of the last 20 years, in fact, the last 93 years. As long as income is taxed, hard work and success will be punished. The solution is the Fair Tax, which would eliminate the income tax, payroll taxes, business and capital gains taxes and the death tax.

The revenue-neutral replacement is a national retail sales tax on new goods and services. It is made progressive with a prebate for the amount of the tax paid on necessities as determined by the Department of Health and Human Services, effectively untaxing the poor. We will rid ourselves of the worst mistake in American constitutional history, the 16th Amendment. The tax gap will be drastically reduced. The huge cost of compliance with the current code will be eliminated.

Best of all, Americans would have their privacy respected, and the hundreds of wasted hours in recordkeeping and form-filling would be gone.

The wealthy would be taxed with every purchase of luxury items, but the incentive for all to work and achieve would be fostered.

GARY H. BURGER

Tempe, Ariz.