Russia, (not the USSR of old though Putin is leaning toward the olden days and their media now is looking a lot like ours or should I say ours is looking a lot like theirs where it is controlled by the socialist in control, but that is a subject for another time), for many years after the fall of the Soviets could not collect 50% of what was owed in personal income taxes. Everybody and their Uncle Stalin cheated and hid income under every Dacha and beet in the country.

Then a few years back the Russian leadership (once again under Putin) put in a flat tax in place and lo and behold they have a higher rate of personal tax collection then the USA. A rate people saw as fair and the punishment for non payment was purposely made so severe that there was little incentive not to pay your taxes.

If there ever is a flat tax in the USA which I personally think it is a good idea which will never happen as DC is made up of accountants and lawyers all of whom make a very very good living finding ways for their clients to legally cheat on the system as it presently is. With a flat tax a whole lot of these folks would be out of work so they will not allow it to occur just as attorneys are not for tort reform and therefore not one word of tort reform is in these health care reform bills of the Senate and the House.

Anyway, what I would suggest is that there would be four deductions under a flat tax and just four.... #1 would be a mortgage deduction on interest paid on a mortgage up to say 1.5 million dollars which would cover those states with higher real estate values and this would not kill the residential construction industry.... #2 Charitable deductions would still be allowed on LEGitimate charitable American charities not some made up charity overseas that know one ever heard of before (by the way I would take away the deductions religions now have on income they get from private businesses. Money from the collection plate or donations would be okay but not if they are running a for profit corporation or renting out church owned property. Then they pay corporate tax like everybody else, #3 a certain amount of deduction for education savings or actual cost from K - College. Not total but a reasonable tax deduction so parents could save for the future of their kids and therefore our country. Lastly #4 would be a health care or savings plan deduction.

My flat tax would have it so that any family making a gross income (after the deductions mentioned above) of say $25,000 a year or less would owe no federal income tax. All income above $25,001 to say $500,000 would pay 15% in federal income tax. Income of $500,001 - $1,500,000 would pay 22% in federal income tax and lastly any income over $1,500.001 and above would pay the max rate of 28%. I would bet that based upon lower cost of monitoring tax revenues and the fact that there would be greater and very severe penalties for tax avoidance our tax revenues would sky rocket.

But of course that is just my opinion. And to my lawyer friends (RR etc...) you are the exceptions to the rule....

God Bless

Marc