Income tax rates (for all entities, including individuals and businesses) should be progressive but calculated using a smooth algebraic formula rather than inherently unfair tax brackets and should be based on total gross yearly earnings before any deductions for retirement contributions, tax payments or anything else are made. Income from all sources, including labor, investment income, gambling winnings and punitive awards, should be included, except income meant as direct compensation for a loss (such as compensatory insurance monies). Gifts, tips and inheritances are also not required to be included.

Since income is an active economic activity, the sales tax would be applied to it. Everyone, including the very poor, must pay the standard sales tax rate on the income they earn. This sales tax, in effect, would be their income tax. A specific income tax would be levied on any individual making more than $50,000 per year.

Negative Income Tax

A negative income tax (NIT) would be paid out to all adult citizens (any citizen 16 years and older will qualify, but at a half rate until age 18, when full rates are provided) to dramatically simplify (or in some cases eliminate) the administrative costs associate with a plethora of other welfare programs. In addition, an NIT would eliminate the perverse incentives, known as the ‘welfare trap’, that often result within other aid programs, when the consequences of earning any relatively small income cause the recipient to become ineligible for continued aid payments, which, in effect results in a significantly smaller overall income.

The formula used for calculating personal income tax rates will be higher than that used for calculating business income tax rates in order to better fit each category’s revenue ranges.

Instead of using tax brackets, a much fairer way to charge income taxes is through the use of a smooth algebraic formula that generates a slightly higher tax rate for each additional dollar of income. The charts below give examples of various income levels and the tax rates that would be associated with those levels according to this smooth algebraic formula.

Individual Income Tax Rate Proposal

Business Income Tax Rate Proposal

Businesses should pay a progressive tax based on their market share (new sales only, not existing products or services in circulation) so that as their market share increases, the rate of this tax increases. The market share of each business would be determined for every political jurisdiction in which that business operates or to which it sells (city, county, state, national, and perhaps even international). Due to different markets having significantly different characteristics such as the number of suppliers and consumers, types of products sold, and other market particulars, it is reasonable that each market should have slightly different progressive market share tax rate schedules. A company that sells one or a few products or services can determine its market share within a political jurisdiction by dividing the number of products it sold in that jurisdiction by the total number of same or similar products sold by all other suppliers in that same jurisdiction. For companies that sell a wide variety of similar products, market share would be determined by grouping their sales into categories and dividing the number of products they sold within each category by the total number of products sold by all other suppliers within the same category. The government, in cooperation with the market participants, would be responsible for defining such categories and would also be responsible for compiling the final sales figures for all market participants for each product or category of products for all relevant political jurisdictions to use in determining their market share.

To prevent this tax from becoming a burden and aggravation to clearly small businesses that do not significantly threaten market stability, all companies who comprise less than 15% of the market share should not be required to pay any of this market share tax.

Constructing the Tax

The rule of thumb should be that a larger number of providers would lower the market share threshold for triggering this specific type of tax. The table below describes the tax rate structure for markets with different numbers of suppliers.

Market Share Tax Rate Proposal

We will use the airline industry to show how such a tax may be implemented. Airlines, like many companies, often use cross-subsidies to enhance their position in markets where others may have the natural advantage. The amount of such a market share tax could vary widely but should always be determined after factoring in all relevant variables, namely the number of producers/suppliers in the specific market and the degree of market share attained by each supplier.

The actual tax amount would be determined by multiplying the degree (in percentage points) that a company exceeds its allowable market share on a specific route by the total revenues that company generates on that route. For example, if a total of three airlines offer 20 daily flights between two cities, and airline #1 has 14 of those flights, that would constitute a 70% market share (let’s assume that each plane has the same number of seats). Let’s say airline #2 has 4 daily flights and airline #3 has 2 flights. Under the rules of this proposal, airline #1’s 14 daily flights would constitute a market share of 70%, thus triggering this tax. Thus, the airline exceeded this limit by 2 flights (equivalent to 10% of the market). Assuming that each flight grosses that airline $10,000, a total of $140,000 would constitute its daily revenues. The actual dollar amount of this market share tax would then be determined by multiplying the $140,000 total revenues generated by participation in the market in which it exceeded it allowable limit, by 10% (equivalent to the excess participation rate in the market). Therefore, this airline’s market share tax would be $14,000 per day. The airline could avoid this tax by reducing its flights to a maximum of 12 per day in this market.

Purpose For This Market Share Tax

The purpose of this tax is to help ensure stability, fairness, competitiveness, and opportunity within markets, mainly by making it more difficult for any one or a few companies to control the vast majority of the market. This tax is also designed to help ensure that if the top market supplier is suddenly eliminated from the market due to some crisis such as a strike, bankruptcy, destruction of production facilities, or other occurrence, there would be enough excess production or service capacity among all the rest of the market suppliers to help the market weather the crisis without society suffering significant product or service shortages and without precipitating acute price volatility or sending destructive price shocks throughout the market or wider economy. Market share dominating suppliers could also potentially cause havoc by making certain business decisions such as drastically increasing prices, lowering production levels or lowering the quality of production. By progressively taxing businesses that increasingly dominate market share (thus increasing their operating costs), they would be discouraged from ever attaining such large sizes that would inherently result in the creation of potentially unfavorable or even disastrous market conditions.

In some industries, especially electronics and computing, an additional benefit of such a market share tax may be to encourage market participants to engage in greater cooperation to design standards that would benefit the industry (and society) as a whole since it would be harder for any single company to gain and maintain such a large market share to make it profitable for it to maintain its own proprietary standards and/or infrastructures.

A progressive tax specifically on profits should be levied on businesses with total revenues that exceed $1,000,000 per year, and whose profits exceed 1% of total revenues. To calculate this tax, each qualifying business would need to multiply its rate of profitability (total revenue minus all expenses, including taxes) with the actual amount of profit.

Profit Tax Example

To see how such a tax would affect profits, let’s use the example of a business which earned a total revenue of $2 million, $1.8 million of which went to pay all business expenses and the remaining $200,000 being profits. Since this profit amount is equal to 10% of its total revenue, then 10% of this $200,000, or $20,000, would be required to be paid to fulfill the profit tax. If instead of $200,000 this business had only a $20,000 profit or less, it would fall below the 1% profit threshold for this tax, thus no profit tax would be owed. On the other hand, if this business had a $1 million profit, this would equate to a 50% profit. Therefore, 50% of this profit, or $500,000, would be owed to fulfill the profit tax.

Purpose For This Profit Tax

The reason for such a tax is that extraordinarily large profits for one or a few companies indicate an imbalance in the market, namely not enough competition. When one company can consistently earn large profits as a percentage of its revenue, that means that its price for the product or service offered is too high. Such a tax as this would further encourage other companies to enter the market and operate successfully at lower profit margins. It is not the government’s place, nor would it be fair for it to set absolute targets or limits on any business’ profitability, however, a general structure of discouraging super large profits could and should be created. This type of system would also help discourage price gouging and would help make the economic environment a little less favorable to giant, super-profitable businesses, increasing the economic space for smaller, mom-and-pop businesses.

Every unit of pollution released into the environment by human activities, beginning with the first unit, should be taxed or penalized. Whether the pollutant is emitted as a natural part of the production process or as a result of an accident, each unit should be taxed at the same rate. Generally, penalties should be directly proportional to the amount of pollution and penalizing each unit (of any given pollutant) at the same rate is the fairest, simplest, and most effective way to reduce pollution from all sources, whether they be point, non-point, or mobile sources of pollution. Each type of pollutant should be penalized at different unit rates because each pollutant negatively impacts the environment in a different way and to a different degree. The per-unit penalty for each pollutant should be set through agreement between scientists, government and industry, perhaps during discussions taking place during industry congress meetings.

There should be no such things as allowable emission levels, mandatory pollution caps, emission permits, emission trading, pollution credits, etc. Everybody should be allowed to pollute as much as they want, so long as they pay the fixed penalty for each unit they release. If the penalties for each unit of pollution are set correctly, there would be no significant pollution crisis. If there is a pollution crisis, we can simply increase the per-unit penalty for that pollutant or, only with extremely valid reasons, we could use an exponential pollution fine structure (where a higher rate is paid for each additional unit of pollution released) as opposed to a proportional one.

Each unit of natural gas that is flared should be charged a tax as should also each component of the various pollutants discharged with that natural gas. The idea is to encourage the capture and sale of this non-renewable resource, because we are definitely going to wish we hadn’t wasted so much of it so frivolously when we are on the down slope of the global production curve.

To minimize human induced pressures on natural ecosystems as well as to encourage greater recycling efforts, a natural resource extraction tax of between 10-15% of the raw material’s value should be levied on all biological (fish, trees, etc.) and non-biological (coal, oil, iron ore, etc.) virgin extractions from the natural environment.

A junk food tax of at least 15% should be levied on ‘junk foods’ that exceed a certain calorie-to-nutritional value ratio as determined by an unbiased organization of food and health professionals. Generally, foods containing excessively high amounts of saturated fats, salt, fat, carbohydrates and/or sugar would be classified as junk foods. Soda and French fries would fall into this category. Although each country should, at the very least, develop its own ratio which would define the boundaries of junk food, the ideal approach would be to work towards developing a global standard definition of junk food by agreeing and adhering to one common ratio. Therefore, a United Nations body or another reputable international health organization should eventually be responsible for developing the definition of junk food and coming up with a calorie-to-nutritional value ratio. Nevertheless, it may not be practical to have just one ratio applied to the definition of junk food globally due to the infeasibility of applying the same standard to dramatically different cultural dietary norms.

Salt and Sugar Tax

Additionally, salt and sugar packages intended for human consumption should also have special taxes imposed, but only at the wholesale level. A retail level tax would be too labor intensive logistically and overly complicate the tax system at the retail level.  This wholesale tax should be set perhaps at around 15%. This tax would naturally be reflected at the retail level to contribute to the desired effect of reducing the human consumption of salt and sugar.

Liquor and Tobacco

Liquor products should also fall under this junk food category and be levied this tax. Tobacco, although not a source for any significant amount of neither calories nor nutritional value, nevertheless should also be defined as a junk food.

Businesses or corporations based or headquartered in one country, but with significant sales in a foreign country, should have those sales in that foreign country treated, for tax purposes, as if they were revenues generated by independent businesses within that foreign country.

For example, Sony Corporation is a Japanese-based business having total global sales revenues (2008) of $79 billion including US sales revenues of $20 billion. For Japanese tax purposes, Sony should be taxed on its total income of $79 billion. But for US tax purposes, Sony should be taxed just as though it were a $20 billion US-based business. These US tax revenues should be paid to the US government.

This would provide a significant economic disincentive for producers operating in foreign markets. It would also help discourage companies with large US-based operations from moving their headquarters offshore just to get away from paying US taxes.

To reduce the amount of collateral environmental damage during harvesting activities, fines should be imposed for each biological organism that is unintentionally killed, harmed, captured, or otherwise negatively affected during the process of normal fishing or environmental harvesting activities. The amount of such fines may vary with each species to reflect each species’ environmental value to its ecosystem, its rarity or legally protected status, or its risk of extinction.

For example, a dolphin becoming entangled and injured within a tuna fishing net would result in a $50 fine. If the dolphin were to die because of the entanglement, the fine could be $100. Another example is shrimp harvesting which results in large amounts of collateral damage occurring to the biology of seafloors. In case like this where it would be prohibitively time consuming and expensive to count all the species affected, other methods can be used, such as imposing a penalty based on the percentage of bycatch to total catch. The higher the percentage of bycatch, the higher the penalty.

Such a policy would encourage the development and adoption of technologies that increase the accuracy of targeted harvesting methods while minimizing damage to fisheries and other parts of the ecosystem.

If the penalties were set to correct levels, the free markets would function to adequately enforce such regulations. For example, one possible easy solution would be to require the video recording of every catch as it is hauled onto the boats. Such videos would be reviewed either in real time or later by inspectors and fines would then be determined. The penalties associated with violations for failure to adequately record the catches, either due to forgetting to turn the equipment on, equipment malfunction or whatever other reason, should result in penalties sufficiently higher to make the fishermen wish they had not forgotten to turn on their equipment, had installed fail-safe technologies that would have warned them about malfunctioning equipment, or taken whatever other measures would have been necessary to avoid the penalties.

All military weapons or munitions that have any measurable or significant negative environmental effect when used (such as bullets, bombs, and almost everything else), even if such an effect is merely inert litter, should be assessed an environmental tax based on the degree of their negative environmental impacts. Almost by definition, such munitions will ultimately end up as litter in the environment.

Assess Tax On Purchase, Refund If Necessary

Ideally, these taxes should only be imposed when these weapons are used in war, during practice, or lost or destroyed by accident resulting in munitions polluting the environment (due to plane crashes, ships sinking, etc.). However, such records would be too difficult to maintain, so imposing this tax upon purchase would be much easier. Then, the military purchaser could receive a full refund of this tax when they decommission and recycle those weapons that were never used and properly disposed. This way the military would have a small economic incentive to use less polluting weapons when they become available.

Tax Components

Some factors to be considered when determining the proper level of the environmental tax for each weapon or munitions should include the absolute quantity of pollution released by the weapon, the scale of environmental contamination (esp. what fraction of all contaminants has been injected into the ground and/or water, with less of an emphasis on air pollution), persistence of each pollutant in the environment, harmfulness or toxicity of each pollutant to the biosphere, etc. Every part of the weapon/munitions should be considered, including chemicals (and their common chemical descendants in the natural environment), explosion gas products, shrapnel, and any other debris directly originating from the munition. This tax could be itemized for each pollutant (regardless of weapon type) so that the military knows exactly how much each weapon will be taxed and how such a tax breaks down per component. For example, if one munition has 2 ounces of mercury, 10 ounces of lead, and 50 pounds of steel, and assuming that the tax for mercury is set at $10 per ounce, and for lead it is set at $5 per ounce and steel’s tax is .10&cent per pound, it could be determined that the total environmental tax for that weapon would be $75. These tax rates could obviously be refined and updated as new information warrants. Even pollutants like steel, though not really chemically harmful to the environment, does litter the landscape with often sharp shrapnel and so should be charged a small environmental tax. Even though the same weapon may have significantly different environmental effects depending on the type of environment in which it is used, the differences being essentially wet or dry environments, only one tax rate should be applied to each pollutant for simplicity’s sake.

Benefits of This Tax

Apart from the clear environmental benefits, an additional significant benefit to such a policy is that this would indicate to our enemies and others that we are interested in minimizing the long-term negative environmental effects of war and that we are willing to take significant measures to protect their environment. Environmentally friendly weapons would send one, if any, positive message that an enemy could receive from its opponent during warfare, working to soften the rage, to various degrees, that an enemy population would have against its opponent.

A war tax should be instituted for a specific purpose, like when the United States is engaged (or plans to be engaged) in a significant military intervention or war. This would be a a tax (like a sales tax) that would be imposed for a specific purpose and would expire once the conflict has ended.

This same principle could be applied for other purposes like Superfund cleanup site funding, nuclear decommissioning, etc.

Lottery sales (and all gambling with a completely random chance of winning based on pure luck) should be levied special gambling taxes so that every level of government having jurisdiction over the location where the sale was made should each receive 10% of the purchase price of the ticket. For example, if a $1 lottery ticket were purchased in the city of Los Angeles, 10% of $1, or 10 cents, would be given to the federal government, 10 cents would be given to the state of California, 10 cents would be given to the county of Los Angeles, and 10 cents would be given to the city of Los Angeles. In other words, there would be a 40% gambling tax on the purchase price of that ticket in the city of Los Angeles. If any jurisdiction chooses not to levy their 10% tax, then the federal government should receive that share, as well. In addition to these gambling taxes, regular sales taxes would be added to the cost of the gambling ticket. Thus, in order for a consumer to purchase a $1 lottery ticket in the city of Los Angeles which has an 9.75% sales tax rate, that consumer would be required to pay a total of $1.50 for the transaction (40 cents for the gambling taxes plus the regular sales tax). If a $1 lottery ticket were purchased in an unincorporated part of Los Angeles County, then the gambling tax would be only 30% because no incorporated city exists at the point of sale to receive its 10% share.

The reason for this tax is to help prevent people from wasting their money on gambling. However, if people choose to gambling, governments should use it as a fundraising activity, namely, taxing such behavior for the benefit of reduced taxes for the rest of society.

A fine for aesthetic deficiency should be levied on properties that appear considerably unaesthetic in relation to the surrounding neighborhood and significantly below the community’s ‘average look and feel’. After a complaint about an unaesthetic property has been submitted, a group of trained, qualified evaluators, probably composed of community representatives, the city council, and/or others not directly acquainted with the parties involved in the dispute, would compare that property to others in the neighborhood and then assign an aesthetic grade to the property in question. Photographs of the offending property and other neighboring and similar kinds of properties in the neighborhood would be taken for reference purposes and to allow all members of the deciding committee to make comparisons. If the property is given a passing grade, no fines or any other action would be taken. If the property is given a failing grade, a fine would be applied that is proportional to the degree to which it failed. The minimum fine should be $100 for extremely minor offenses, like leaving a garbage can out past the allowable time. Furthermore, a notice would be issued to the property owner and occupant (if they are different people) requiring them to fix the aesthetic pollutant within one month or within another reasonable time period, at which time their will be another aesthetic inspection. If they fail this second inspection regardless of the degree to which they fail, the same time frame for compliance would again be issued but the original fines would be doubled.

Any individual may submit an aesthetic complaint concerning any kind of property, whether it is private, public, commercial, or anything else. Complaints about unsightly infrastructures, telephone poles, cell phone towers, poorly maintained landscaping, graffiti, illegal signs, and anything else could be allowed. However, any person submitting a complaint must be required to pay a $25 filing fee. Such a fee would help filter out trivial complaints. If such complaints prove valid, the fee would be returned. In addition, if a fine is assessed to the property owner, the original informant(s) who submitted the original complaint would be entitled to receive a significant portion of that fine as compensation and reward for informing authorities about the aesthetic violation.

Safety Standards

All foreign vehicles entering US territory must meet minimum US safety standards. Such vehicles must be registered annually with US authorities to receive the proper approval. The same regulations and penalties should apply to foreign vehicles as apply to domestic vehicles, and the fees charged should cover all costs related to enforcement. Major safety concerns should result in grounding, but minor concerns should be fined sufficiently, varying based on their severity.

Pollution Fines

The fines for vehicle pollution should use the same regulations and penalties in effect for domestic vehicles, namely a fine for each unit of pollution of each type emitted. Perhaps odometer readings, hours of run time, or other measures could be taken both while entering and exiting the country to determine the total cost for such fines.

The governments of all political jurisdictions (city, county, state, country, etc.) may regulate, tax and sell electromagnetic spectrum frequencies for active use. However, all levels of government (with permission from higher levels, if necessary) should have the right of eminent domain to any portion of the electromagnetic spectrum so long as they notify users with plenty of time and compensate them fairly for the costs and inconveniences involved in the transitions. Passive use of the spectrum (ex. telescopes, radio receivers) would not be taxed or regulated.

There should be a tax on the commercial uses of incorrect spelling and grammar. For example, Krispy Kreme should be required to pay a tax for using these incorrect spellings. Another example would be when names and proper nouns are not capitalized on commercial products (books, movies, etc.). Written names like “adam smith” should be taxed, for example. This type of tax would help discourage incorrect uses of language and slow down and help prevent the corruption and evolution of the English language.