I listened to actress Eva Longoria as she addressed the DNC Convention in North Carolina last week. Ms. Longoria lectured Americans on tax fairness and how Americans should gladly submit to higher taxes to address tax injustice. She enthusiastically exclaimed that she didn’t need a tax break now that she was a rich person, but could have used one when she was flipping burgers in her younger years. That’s when it hit me -Ms. Perone, err…… Longoria had it half right. Sorta.
The problem with most tax rules is that the impact of taxes is not felt evenly upon those whom they are imposed. Got it? It’s not your tax dollar amount, it’s how it impacts you. For example, say George Clooney earns $60 million in one year for being an actor. George could pay 60 % in taxes and still get to keep $24 million without any real impact on his lifestyle. George could easily continue to dine at fine restaurants, live in lovely mansions, charter private jets, and own his villa in Italy.
Now let’s say, Julia is a small business owner and makes just $250,000 a year. A 60 % income tax on Julia would net her $100,000 a year, and would negatively impact her ability to afford a new car or a home, pay for her son’s college, or take a vacation. Julia would endure a much higher tax impact as a result of a 60% rate than George would. And that just doesn’t seem, ………. well…….., fair.
I think all Americans would be on board with a tax policy which impacts everyone equally, no matter what they did or didn’t earn. A plan that metes tax justice and wealth spreading fairness for all Americans. So after a bit of thought, I’ve come up with a new tax plan which I call the “The Longoria Rule.” It’s simple, it’s easy and luckily for Eva requires next to no math.
Under “The Longoria Rule,” everyone is allowed to earn as much as they desire to earn. Yes, you heard me correctly. Earn as much as you possibly can. No limit. In fact, the more you earn, the better for us all. After all, we are all in this together, no? For example, let’s say in one year, George Clooney earns $60 million. Guess what? He worked for it and so he gets to earn it. Yes, you heard me. The sky is the limit for income earning.
Now here’s where the fairness and tax justice part come in: The “Longoria Rule” limits how much a person may keep with a Retained Income Limit. A cap is placed on, not what you earn, but what you may keep. Talk about fair! The Retained Income Limit is the same for everyone – $250,000! So, even though he earned $60 million, George only gets to keep $250,000 because that’s all anyone is allowed to keep, and surely it is enough (I mean how much is enough, anyway).
You are probably wondering what happens to Americans who don’t earn $250,000? Here’s the answer: The money George or any other American earns in excess of $250,000 is taxed at 100%! Got that? Anything earned over $250,000 goes into the Income Reappropriation Pool (IRP) and is spread to those who did not earn $250,000 in the first place. No gimmicks. No loopholes. No deductions. No tax breaks. Nada. Nobody keeps more than $250,000.
The beauty of this plan is that all Americans would be permitted to keep from their earnings, or receive from the IRP, the same amount of money, no matter how much they earned! Hello??? Did you hear me??? Everyone gets the same amount of money!
“The Longoria Rule” combines the best of all worlds, by leveling the playing field for all Americans, redistributing the wealth in a fair and equitable way, and making sure that no one job is valued over another. It actually rids society of economic and class warfare by getting rid of income disparity. It just seems so simple, I am not sure why Eva or Warren Buffett did not think of this before.
An added bonus to the “The Longoria Rule” is that prices will come down as income levels are reduced and leveled. Housing, clothing, food, automobiles will all become more affordable as spending power becomes more equitable. Think of it - George could theoretically be forced to buy the condo next door to you because, like you, that’s all he can afford. You might run into Eva at The Piggly Wiggly or share expired coupons with Cher at Walmart!
Everybody sharing and living in harmony, enjoying the collective fruits of society’s producers. Nobody gets more than you because nobody deserves more; we all work hard and we all are smart.
It’s like Obama’s dream, only fairer and better! It’s a really, really fair tax.