Having said all of that, I believe a flat-rate income tax is the fairest form. Right now, the tax code is a complex disaster, which favors a lot of connected entities with subsidies and loopholes. Many corporations pay no income tax, while individuals get stuck with the bill.

Even Warren Buffet, the richest man in the world, has complained that he pays a lower tax rate than his secretary.
Bret´s last blog ..Fixing Health Care

-Primarily a spending tax (a la the Fair tax), levied on all purchases by individuals or corporations. Equal rates applied to all consumers, to limit any gaming of the system; no corporations buying cars for executives to save on taxes or anything like that.

-Replace the individual states’ sales taxes with proceeds from the national sales tax; send some portion of the proceeds (say, one third) to the states according to population. This will simplify the process of determining taxes in each individual state.

-Include the tax into stated price of the good; it’ll simplify trying to determine how much something will really cost (and combined with the above step, will ensure there’s no sales tax shock when you go from one state to another).

-Perhaps some form of prebate (as with the Fair Tax), which will ideally replace some of the social programs such as food stamps. (This is getting off the subject of a tax, but if you replace the myriad of social programs with a simple, fixed dollar amount of money given to each person, you could cut down greatly on administrative costs of running such social programs and still, in theory, benefit everyone who needs help.)

-Some sort of tax on imports; you don’t want rich people/corporations making all their major purchases in foreign countries to dodge the sales tax in the US. Ideally, split the tax revenue between the US and the appropriate foreign government, so they have an incentive to help us enforce our rules.

-Keep the estate tax (maybe). I’m torn on this point; on one hand, it does seem a bit wrong (and morbid) to tax someone’s estate, on the other hand, allowing people who may have had nothing to do with earning the money to gain a vast fortune simply by virtue of being born to wealthy parents (or marrying a rich guy on his last legs) also seems wrong. Depending on all the details of the spending tax, that alone might be enough to capture a good share of the inherited wealth, but if not, some sort of estate tax seems like a decent idea. (Call it the ‘Paris Hilton tax’, both to make it clear what sort of people we’re trying to target, as well as making it more politically palatable.)

-Rearrange the IRS to monitor sales and other exchanges of goods and services. Even in my ideal world, I have no delusions that under the table arrangements to dodge the sales taxes will not occur. While not an issue for publicly traded corporations (any decrease in the taxes they submit by reporting lower earnings would be offset by lower stock prices for not meeting earnings expectations), the incentive for individuals to do their spending in the black market would undoubted increase. (To say nothing of the up to now largely untaxed internet market). Why start from scratch when we already have a government organization in charge of looking for such chicanery? Change their name to the Internal Sales Commission, get some new stationary, and put them to work!

That’s more than enough for now; I might have to write about this some more, myself. (Heck, I practically wrote a blog entry just in this response.) Good topic for discussion!
Roger´s last blog ..Investing 101: Gold

Less rules then also mean less government overhead and that means less taxes and more IRS employees to dig ditches, which is all they are good for if not employees by the IRS. Sorry, that was not nice, I am sure they are nice people.
jwier92´s last blog ..Tuesday Twister 20090721

Would you also tax services in your dream tax world? Just thinking that that is a big loophole.

Like: Hey we’re going to give you this car for free, if you sign up for our 6 year service contract at $2,400/yr.

There would be one automated system by which people are taxed. The calculation of taxes would be a graduated income tax, with no deductions or credits or anything like that.

Corporations and individuals would be taxed using exactly the same calculation. Anyone below poverty would pay nothing, and from there on up the rate would be gradual. The top tax rate on the very last marginal dollar of daily profit generated in the economy (most likely by ExxonMobil), would be taxed at a rate set by the calculation so that the tax revenues would equal the forecasted budget for the year (this is of course, after we have paid off our debt, like a good pf blogger, before that, it would be higher).

Your taxes would be taken from your wages daily, and you would be paid daily.