A Tax Reform Plan that Both Parties Can Like

America’s tax system is unfair, distortionary, wasteful and a user’s nightmare. Most important, it’s limiting our country’s economic potential. But can we have a far simpler tax system that generates at least as much revenue and is more progressive, ask John Goodman, president and CEO of the National Center for Policy Analysis, and Laurence J. Kotlikoff, a senior fellow at the National Center for Policy Analysis and a professor of economics at Boston University.

Yes, it’s called the Common Sense Tax (CST). It’s designed to be revenue neutral and kick start our ailing economy. It features just two taxes.

– One is a payroll tax that taxes all labor earnings at a flat 13 percent rate.

– The other is a personal income tax with a 25 percent tax on household income above $100,000, in the case of married households, and $50,000, in the case of singles.

The CST has no explicit corporate income tax and no explicit estate and gift tax. But the CST income tax base includes imputed corporate profits and gifts and inheritances received.

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