I would like to see a simplified income tax system that did away with write offs and deductions. I call my plan the progressive flat tax system or graduated flat tax system. It will simplify the tax code without the neo-conservative attack on the poorest citizens as a basic flat tax inevitably is.
Citizens would have the first $35 000 of income exempt from taxation but this base threshold would fluctuate with the basic cost of living. Over $35 000 would be taxed at 5% up to $70 000 or perhaps as high as $100 000. The next threshold would be 10% up to $500 000 and everything over $500 000 up to a million would be taxed at 15% . Over a million the tax rate would jump to 20%.
If the provinces wished to harmonize their income tax system with the federal system the would mirror the Federal rates so the lowest would be 0% then 10%, 20%, 30% and 40%. Provinces would automatically give 1%, 2%, 3% and 4% directly to the local government. Many local governments would be able to provide services without property taxes as their portion of the income tax would cover all expenses.
Business taxes would also be set up the same way. A business would not pay any tax on the first $100 000 of revenue. To $1 000 000 the rate would be 5% or 10% if the provinces opted into this system. Over a million the rate would be 10% or 20% with provincial participation. Over a half billion would be 15% or 30% with the provinces. Everything over a 1.5 billion would be taxed at 20% or 40% with the province. Again 1%, 2%, 3% and 4% would go directly to local government out of the provincial portion.
Arts and culture would be exempt up to $250 000 and only pay 5% on revenues over that. Businesses that focus on research and development would be exempt up to $500 000 and only pay 10% above that. A one year tax holiday for new businesses would also be implemented to encourage new business. Skilled labour that is in short supply would get exempted up to $50 000 to encourage people getting those skills. Students of accredited post secondary institution would not pay taxes at all for the duration of full time studies.
Businesses that polluted or created any form of waste or disposable product would pay a separate series of taxes equal to the tonnage of pollution and the toxicity level. Or they would and their officers would be liable for the full cost of clean up and resource recovery.
As capital gains are a form of revenue they would be taxed accordingly. First nation communities could become internal tax havens but only if their citizens voted in a referendum for it. First nation financial institutions would receive start up grants and Federal protection from hostile take over.