Wednesday, October 21, 2009

A "short" form

The Wall Street Journal mentioned last week that the top 23 banks and investment firms were going to give about $ 140 billion in bonuses this year: a record amount.

The Pres and his minions played the usual jaw music that it was "offensive" etc. etc. I can't say I "knew FDR" but I know FDR wouldn't have just talked about this.

I have a modest proposal for doing something about these unneeded and unreasonable incomes: a simple adjustment of the tax code. Here's a mild version. You can use the usual 1040 and its associated schedules for determining your tax liability on your first $5 million of income. Write a check for this amount. Next, for all income exceeding $5 million, there will be an additional special short form: Take your gross income above $5 million (i.e. subtract $5 million from the total of your earnings, including bonuses, stocks, dividends etc). Enter it on the short form, multiply by 80%, deduct state and local taxes, enter that number, and write another check to the IRS for that amount. Enclose forms and both checks in an envelope and mail it all in.

So, if you make say $ 7 million, you pay the usual taxes on the first $5 million, then simply write an additional check for $ 1,600,000 (minus state and local taxes) to the IRS.

Oh, and by the way, Social Security and Medicare taxes will apply to all earned income, with no cutoff.

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